Store of Values Inc. has a new building that cost $400,000. It will be depreciated using DB amortization. The estimated residual value of the building is $50,000 and it has an expected useful life of 10 years. Assuming the first year's amortization expense was recorded properly, what would be the amount of amortization expense for the second year? $40,000 $35,000 $36,000 $31,500
Store of Values Inc. has a new building that cost $400,000. It will be depreciated using DB amortization. The estimated residual value of the building is $50,000 and it has an expected useful life of 10 years. Assuming the first year's amortization expense was recorded properly, what would be the amount of amortization expense for the second year? $40,000 $35,000 $36,000 $31,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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Transcribed Image Text:Store of Values Inc. has a new building
that cost $400,000. It will be
depreciated using DB amortization.
The estimated residual value of the
building is $50,000 and it has an
expected useful life of 10 years.
Assuming the first year's amortization
expense was recorded properly, what
would be the amount of amortization
expense for the second year?
$40,000
$35,000
$36,000
$31,500
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