The Addy Corporation purchased a new oven for its commercial kitchen on August ist for $14,000 and expects to use it for 8 years at which time it can be sold for an estimated $2,000. What net book value would the company report for the equipment in its calendar year-end financial statements?

The Addy Corporation purchased a new oven for its commercial kitchen on August ist for $14,000 and expects to use it for 8 years at which time it can be sold for an estimated $2,000. What net book value would the company report for the equipment in its calendar year-end financial statements?

Name: The Addy Corporation purchased a new oven for its commercial kitchen
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Description: The Addy Corporation purchased a new oven for its commercial kitchen on August 1st for $14,000 andexpects to use it for 8 years at which time it can be sold for an estimated $2,000. What net book valuewould the company report for the equipment in it

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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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The Addy Corporation purchased a new oven for its commercial kitchen on August 1st for $14,000 and
expects to use it for 8 years at which time it can be sold for an estimated $2,000. What net book value
would the company report for the equipment in its calendar year-end financial statements?

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