Utah Company purchased equipment that cost $3,000,000 on January 1, 2018. The entire cost was recorded as an expense. The equipment has a ten-year life and a $100,000 residual value. Utah uses the straight-line method to account for depreciation expense. The error was discovered on May 15, 2022. What is the adjustment to retained earnings on May 15, 2022?
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.
Utah Company purchased equipment that cost $3,000,000 on January 1, 2018. The entire cost was recorded as an expense. The equipment has a ten-year life and a $100,000 residual value. Utah uses the straight-line method to account for
What is the adjustment to
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