On January 1, 20x2, Kent Corporation purchased a machine for $50,000. Kent paid shopping expenses of $500 as well as installation costs of $1,200. The machine was estimated to have a useful life of 10 years and estimated salvage value of $3,000. In January 20x3, additions costing $3,600 were made to the machine in order to comply with pollution control ordinances. These additions neither prolonged the life of the machine nor did they have any salvage value. If Kent records depreciation under the straight-line method, depreciation expense for 20x3 is a.$4,870 b.$5,170 c.$5,270 d.$5,570
On January 1, 20x2, Kent Corporation purchased a machine for $50,000. Kent paid shopping expenses of $500 as well as installation costs of $1,200. The machine was estimated to have a useful life of 10 years and estimated salvage value of $3,000. In January 20x3, additions costing $3,600 were made to the machine in order to comply with pollution control ordinances. These additions neither prolonged the life of the machine nor did they have any salvage value. If Kent records depreciation under the straight-line method, depreciation expense for 20x3 is a.$4,870 b.$5,170 c.$5,270 d.$5,570
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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On January 1, 20x2, Kent Corporation purchased a machine for $50,000. Kent paid shopping expenses of $500 as well as installation costs of $1,200. The machine was estimated to have a useful life of 10 years and estimated salvage value of $3,000. In January 20x3, additions costing $3,600 were made to the machine in order to comply with pollution control ordinances. These additions neither prolonged the life of the machine nor did they have any salvage value. If Kent records depreciation under the straight-line method, depreciation expense for 20x3 is
a.$4,870
b.$5,170
c.$5,270
d.$5,570
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