On January 1, 2027, Talion Company purchased equipment that cost $300,000. The equipment had an expected useful life of 10 years and a residual value of $10,000. On January 1, 2031, Talion Company decided the life of the equipment should be changed from 10 years to 20 years with a salvage value at the end of the 20 years being equal to $5,000. Talion Company uses the double-declining balance method to record depreciation on its assets. Calculate the amount of depreciation expense recorded on the equipment for 2032.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
On January 1, 2027, Talion Company purchased equipment that
cost $300,000. The equipment had an expected useful life of
10 years and a residual value of $10,000.
On January 1, 2031, Talion Company decided the life of the
equipment should be changed from 10 years to 20 years with
a salvage value at the end of the 20 years being equal to
$5,000.
Talion Company uses the double-declining balance method to
record
Calculate the amount of depreciation expense recorded on
the equipment for 2032.
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