Explanation Depreciation: When the value of asset falls with the passage of time due to reasons like wear and tear and for any other reason, it is called depreciation. Straight Line Method : When the fixed percent of depreciation is charged on the original cost of the asset it is known as the straight line method. Partial Period Assumption: When the asset is purchased on any date after the first of the month, the date of acquisition is considered to be middle of the month. This assumption is known as partial period assumption. Formula to calculate depreciation expense is as follows: Depreciation expense = Cost − Scrap value Useful life Substitute $384,000 for the cost, scrap value is nil and 16 for useful life in formula, Depreciation expense = $ 384 , 000 − 0

Pearson eText Intermediate Accounting -- Instant Access (Pearson+)

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ISBN: 9780136946649

Author: Elizabeth Gordon, Jana Raedy

Publisher: PEARSON+

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Chapter 11, Problem 11.13BE

To determine

The depreciation for first two years.

Given information:

Cost of oven is $384,000.

Useful life is 16 years.

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Chapter 11, Problem 11.12BE

Chapter 11, Problem 11.14BE

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The depreciation for first two years. Given information: Cost of oven is $384,000. Useful life is 16 years.

Solution Summary: The author calculates the amount of depreciation for first year and second year, based on the straight line method and partial period assumption.