On January 2, 2022, Baker Company purchased land that cost $790,000, a building on the land that cost $570,000, and equipment that cost $54,000. building has an estimated useful life of 24 years. The equipment has an estimated useful life of 9 years. Required: Prepare the property, plant, and equipment section of the balance sheet as of December 31, 2022. Note: Use straight-line depreciation with no salvage value. Property, Plant, and Equipment (Choose one) Total Property, Plant, and Equipment Baker Company Balance Sheet (partial) December 31
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.
The depreciation expense is charged on the fixed assets as a reduction in the value of the fixed assets with usage and passage of time. The accumulated depreciation is the total depreciation charged on the assets till date.
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