On January 2, 2018 JC Corporation acquired a new machine with an estimated useful life of five years. The cost of the equipment was $40,0000 with an estimated residual value of $5,000 a. I need prepare a complete depreciation table under the three depreciation methods listed as bellow. In each case I must assume that a full year of depreciation was taken in 2018 Straight line 200 percent declining balance. 150 percent declining balance with switch to straight line when it will maximize depreciation expense b. Please comment on significant difference or similarities that you observe among the patterns of depreciation expense recognized under each of these methods
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 2, 2018 JC Corporation acquired a new machine with an estimated useful life of five years. The cost of the equipment was $40,0000 with an estimated residual value of $5,000
a. I need prepare a complete
- Straight line
- 200 percent declining balance.
- 150 percent declining balance with switch to straight line when it will maximize depreciation expense
b. Please comment on significant difference or similarities that you observe among the patterns of depreciation expense recognized under each of these methods
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