Santa Rosa recently purchased a new boat to help ship product overseas. The following information is related to that purchase: Purchase price $4,100,000 Cost to bring boat to production facility $29,000 Yearly insurance cost $29,000 Annual maintenance cost of $40,000 Received 6% discount on sales price A. Determine the acquisition cost of the boat. $? B. Record the journal entry needed. If an amount box does not require an entry, leave it blank.
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.
Santa Rosa recently purchased a new boat to help ship product overseas. The following information is related to that purchase:
- Purchase price $4,100,000
- Cost to bring boat to production facility $29,000
- Yearly insurance cost $29,000
- Annual maintenance cost of $40,000
- Received 6% discount on sales price
A. Determine the acquisition cost of the boat.
$?
B. Record the
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