Providence Corporation purchased machinery on March 24th, 2022. Assume this machinery was the company's only capital asset and that the company uses the half year rule to calculate depreciation expense. The following information is available. Cost Estimated useful life Residual value $450,000 15 years or 145,000 hours $70,000 The machinery was used for 35,000 hours in 2022 and 60,000 hours in 2023 Required: 1. Calculate the depreciation for 2022 under each of the following methods: a. Usage b. Straight-line c. Double-declining balance 2. Calculate the depreciation for 2023 under each of the following methods: a. Usage b. Straight-line c. Double-declining balance 3. If the company used Double-declining balance what would be the net book value of the asset at the end of the year 2023?

Providence Corporation purchased machinery on March 24th, 2022. Assume this machinery was the company's only capital asset and that the company uses the half year rule to calculate depreciation expense. The following information is available. Cost Estimated useful life Residual value $450,000 15 years or 145,000 hours $70,000 The machinery was used for 35,000 hours in 2022 and 60,000 hours in 2023 Required: 1. Calculate the depreciation for 2022 under each of the following methods: a. Usage b. Straight-line c. Double-declining balance 2. Calculate the depreciation for 2023 under each of the following methods: a. Usage b. Straight-line c. Double-declining balance 3. If the company used Double-declining balance what would be the net book value of the asset at the end of the year 2023?

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Description: Providence Corporation purchased machinery on March 24th, 2022. Assume this machinery was the company's only capital asset and that the company uses the half year rule to calculatedepreciation expense. The following information is available. Cost Es

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

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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Providence Corporation purchased machinery on March 24th, 2022. Assume this machinery was the company's only capital asset and that the company uses the half year rule to calculate
depreciation expense. The following information is available. Cost Estimated useful life Residual value $450,000 15 years or 145,000 hours $70,000 The machinery was used for 35,000 hours in
2022 and 60,000 hours in 2023 Required: 1. Calculate the depreciation for 2022 under each of the following methods: a. Usage b. Straight-line c. Double - declining balance 2. Calculate the
depreciation for 2023 under each of the following methods: a. Usage b. Straight line c. Double - declining balance 3. If the company used Double - declining balance what would be the net book
value of the asset at the end of the year 2023?

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