The following balances were taken from the books of Sheridan Corp. on December 31, 2020. $87,300 52,300 1,381,300 Accumulated depreciation-equipment Accumulated depreciation-buildings 151,300 21,300 151,300 8,300 46,300 101,300 201,300 141,300 622,300 Interest revenue Cash Sales revenue Accounts receivable Prepaid insurance Sales returns and allowances Allowance for doubtful accounts Sales discounts Land Equipment Buildings Cost of goods sold Notes receivable Selling expenses Accounts payable Bonds payable Administrative and general expenses Accrued liabilities Interest expense Notes payable Loss from earthquake damage Common stock Retained earnings $41,300 29,300 156,300 195,300 171,300 101,300 98,300 33,300 61,300 101,300 151,300 501,300 22,300 Assume the total effective tax rate on all items is 20%. Prepare a multiple-step income statement; 100,000 shares of common stock were outstanding during the year. (Round ex share to 2 decimal places, e.g. 1.48.)
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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