Wardell Company purchased a minicomputer on January 1, 2013, at a cost of $50,000. The computer was depreciated using the sum-of-the-years'-digits method over an estimated seven-year life with an estimated residual value of $4,000. On January 1, 2016, the estimate of useful life was changed to a total of 11 years, and the estimate of residual value was changed to $800. Question Depreciation for 2016 would be: $4,362 $7,714 $3,790 $5,790
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.
Wardell Company purchased a minicomputer on January 1, 2013, at a cost of $50,000. The computer was
Question
Depreciation for 2016 would be:
|
$4,362 |
||
|
$7,714 |
||
|
$3,790 |
||
|
$5,790 |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
