1. Explanation Depreciation : Depreciation is a method of reducing the capitalized cost of long-lived operating assets or plant assets for the period the asset is used. Straight-line depreciation method: The depreciation method which assumes that the consumption of economic benefits of long-term asset could be distributed equally throughout the useful life of the asset is referred to as straight-line method. Sum-of- the-years’ digits method: Sum-of-the years’ digits method determines the depreciation by multiplying the depreciable base and declining fraction. Double-declining-balance method: The depreciation method which assumes that the consumption of economic benefits of long-term asset is high in the early years but gradually declines towards the end of its useful life is referred to as double-declining-balance method. Identify the deprecation method that the company has used for each asset as follows: Asset A: In this case, the company has used straight line method for Asset A , because depreciation expense for each year is same. Calculate the straight line rate for Asset A. Depreciation rate = Depreciation expense Depreciation base = $ 4 , 000 $ 16 , 000 ( 1 ) × 100 = 25 % The straight line rate is 25%, which indicates that asset A has useful life of 4 years ( 100 25 ) . Working note (1): Calculate the deprecation base of asset. Depreciation base = Cost of assets − Estimated residual value =$17,000 − $ 1 , 000 = $ 16 , 000 Asset B: In this case, the company has used sum of the year’s digit method for Asset B , because depreciation expense for each year is decreased by the fraction 2. To determine Calculate the depreciation expense of Company N for 2018 and 2019 for each asset.

2nd Edition

ISBN: 9781337268998

Author: PAGACH

Publisher: YUZU

See similar textbooks

Concept explainers

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 exp…

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…

Videos

Question

Chapter 11, Problem 3E

To determine

Identify the deprecation method that the company has used for each asset.

To determine

Calculate the depreciation expense of Company N for 2018 and 2019 for each asset.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 11, Problem 2E

Chapter 11, Problem 4E

Students have asked these similar questions

Ans plz general accounting

What is this firm WACC

None

Chapter 11 Solutions

EBK INTERMEDIATE ACCOUNTING: REPORTING

Ch. 11 - Briefly explain the meaning of the four factors...Ch. 11 - Prob. 2GI Ch. 11 - Would it be desirable to require all companies to...Ch. 11 - What is the depredation base?Ch. 11 - Prob. 5GI Ch. 11 - A company should use an accelerated depreciation...Ch. 11 - Prob. 7GI Ch. 11 - Prob. 8GI Ch. 11 - Prob. 9GI Ch. 11 - Prob. 10GI

Ch. 11 - Under U.S. GAAP, in a year in which the fair value...Ch. 11 - Prob. 12GI Ch. 11 - Prob. 13GI Ch. 11 - Compare the group and composite methods of...Ch. 11 - Prob. 15GI Ch. 11 - Describe the accounting for changes and...Ch. 11 - Prob. 17GI Ch. 11 - Prob. 18GI Ch. 11 - Explain the meaning of an impaired asset and...Ch. 11 - Prob. 20GI Ch. 11 - Prob. 21GI Ch. 11 - Prob. 22GI Ch. 11 - (Appendix 11.1) Why might depreciation on a...Ch. 11 - A method that excludes residual value from the...Ch. 11 - Prob. 2MC Ch. 11 - Prob. 3MC Ch. 11 - Prob. 4MC Ch. 11 - A machine with a 4-year estimated useful life and...Ch. 11 - At the end of the expected useful life of a...Ch. 11 - The composite depreciation method: a. is applied...Ch. 11 - Prob. 8MC Ch. 11 - A fixed asset with a 5-year estimated useful life...Ch. 11 - Crowder Company acquired a tract of land...Ch. 11 - Susquehanna Company purchased an asset at the...Ch. 11 - Akron Incorporated purchased an asset at the...Ch. 11 - Albany Corporation purchased equipment at the...Ch. 11 - Utica Machinery Company purchases an asset for...Ch. 11 - In Year 1, Utica Machinery Company uses the asset...Ch. 11 - At the beginning of Year 1, Herkimer Co....Ch. 11 - At the end of Year 1, Herkimer Co. sells two...Ch. 11 - Buffalo, Inc., uses composite depreciation for its...Ch. 11 - Prob. 9RE Ch. 11 - Assume the same information as in RE11-3, except...Ch. 11 - Oneonta Co. owns equipment with a cost of 300,000...Ch. 11 - At the beginning of the current year, Andy Company...Ch. 11 - Prob. 13RE Ch. 11 - (Appendix 11.1) Auburn Company purchased an asset...Ch. 11 - Gruman Company purchased a machine for 220,000 on...Ch. 11 - Prob. 2E Ch. 11 - Prob. 3E Ch. 11 - Prob. 4E Ch. 11 - Prob. 5E Ch. 11 - Prob. 6E Ch. 11 - Loban Company purchased four cars for 9,000 each...Ch. 11 - Wilcox Company acquires four machines that have...Ch. 11 - Lightning Delivery Company purchased a new...Ch. 11 - Prob. 10E Ch. 11 - Prob. 11E Ch. 11 - Prob. 12E Ch. 11 - Bailand Company purchased a building for 210,000...Ch. 11 - Prob. 14E Ch. 11 - On January 1, 2012, Vallahara Company purchased...Ch. 11 - Prob. 16E Ch. 11 - Prob. 17E Ch. 11 - Prob. 18E Ch. 11 - Prob. 19E Ch. 11 - Prob. 20E Ch. 11 - Prob. 1P Ch. 11 - Prob. 2P Ch. 11 - Prob. 3P Ch. 11 - Prob. 4P Ch. 11 - Prob. 5P Ch. 11 - Prob. 6P Ch. 11 - Prob. 7P Ch. 11 - Prob. 8P Ch. 11 - During 2016, Ryel Companys controller asked you to...Ch. 11 - Prob. 10P Ch. 11 - On January 1, 2011, Borstad Company purchased...Ch. 11 - Prob. 12P Ch. 11 - Prob. 13P Ch. 11 - Prob. 14P Ch. 11 - Prob. 15P Ch. 11 - Prob. 16P Ch. 11 - Prob. 17P Ch. 11 - Prob. 18P Ch. 11 - Prob. 19P Ch. 11 - Prob. 20P Ch. 11 - Prob. 21P Ch. 11 - Prob. 1C Ch. 11 - Prob. 2C Ch. 11 - Straight-Line and Composite Depreciation Portland...Ch. 11 - Depreciation continues to be one of the most...Ch. 11 - The following two statements concern depreciation:...Ch. 11 - Prob. 6C

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Identify the deprecation method that the company has used for each asset.

Solution Summary: The author identifies the deprecation method that the company has used for each asset. Depreciation is a method of reducing the capitalized cost of long-lived operating assets or plant assets.

Concept explainers

Videos

Identify the deprecation method that the company has used for each asset.

Calculate the depreciation expense of Company N for 2018 and 2019 for each asset.

Want to see the full answer?

Chapter 11 Solutions