Use the following data to answer Questions 16 to 30 On July 1, 2016, Tingting Manufacturing Limited (which has a Dec 31st year end) purchased equipment for $50,000 that has an estimated life of five years and a disposal value of $5,000. On January 1st, 2018, a major improvement was made to the equipment costing $5,000. As a result, the production capacity doubled, but its expected life and residual value remained unchanged. At the beginning of 2019, Tingting Manufacturing Limited revised the estimated remaining useful life to be two years and its disposable value to $1,071.43
Use the following data to answer Questions 16 to 30 On July 1, 2016, Tingting Manufacturing Limited (which has a Dec 31st year end) purchased equipment for $50,000 that has an estimated life of five years and a disposal value of $5,000. On January 1st, 2018, a major improvement was made to the equipment costing $5,000. As a result, the production capacity doubled, but its expected life and residual value remained unchanged. At the beginning of 2019, Tingting Manufacturing Limited revised the estimated remaining useful life to be two years and its disposable value to $1,071.43
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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how do i solve this using the decline-balance method?
Transcribed Image Text:Use the following data to answer Questions 16 to 30
On July 1, 2016, Tingting Manufacturing Limited (which has a Dec 31st year end) purchased equipment for
$50,000 that has an estimated life of five years and a disposal value of $5,000. On January 1st, 2018, a major
improvement was made to the equipment costing $5,000. As a result, the production capacity doubled, but
its expected life and residual value remained unchanged. At the beginning of 2019, Tingting Manufacturing
Limited revised the estimated remaining useful life to be two years and its disposable value to $1,071.43
Transcribed Image Text:21) Assuming that Declining-Balance Method is used to calculate depreciation, the depreciation
expense of 2016 would be:
a) 4,500
b) 5,000
c) 9,000
d) 11,714
e) None of the above
22) Assuming that Declining-Balance Method is used to calculate depreciation, the depreciation
expense of 2017 would be:
a) 4,500
b) 5,000
c) 9,000
d) 11,714
e) None of the above
23) Assuming that Declining-Balance Method is used to calculate depreciation, the depreciation
expense of 2019 would be:
a) 4,500
b) 5,000
c) 9,000
d) 11,714
e) None of the above
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