Thornton Industries purchased a machine on July 1for $45,000 and is depreciating it with the straight-linemethod over a life of 10 years, using a residual value of$3,000. Depreciation Expense for the machine for thatyear ended December 31 isa. $2,100 c. $4,200b. $2,250 d. $4,500
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.
Thornton Industries purchased a machine on July 1
for $45,000 and is
method over a life of 10 years, using a residual value of
$3,000. Depreciation Expense for the machine for that
year ended December 31 is
a. $2,100 c. $4,200
b. $2,250 d. $4,500
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