Oriole Company bought equipment for $290000 on January 1, 2016. Oriole estimated the useful life to be 5 years with no salvage value, and the straight-line method of depreciation will be used. On January 1, 2017, Oriole decides that the business will use the equipment for a total of 6 years. What is the revised depreciation expense for 2017?
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.
Oriole Company bought equipment for $290000 on January 1, 2016. Oriole estimated the useful life to be 5 years with no salvage value, and the straight-line method of
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