On April 30, Year 1, Tilton Products purchased machinery for $44,000. The useful life of this machinery is estimated at 8 years, with an $4,000 residual value. Tilton uses a calendar year - end for financial reporting. Assume that in its financial statements, Tilton Products uses the 150% - declining - balance method and the half- year convention. Depreciation expense in Year 1 and Year 2 will be: Multiple Choice $4, 125 in Year 1 and $7.477 in Year 2. $8, 250 in Year 1 and $8, 250 in Year 2. $7,500 in Year 1 and $6, 844 in Year 2. $8, 250 in Year 1 and $7, 477 in Year 2.
On April 30, Year 1, Tilton Products purchased machinery for $44,000. The useful life of this machinery is estimated at 8 years, with an $4,000 residual value. Tilton uses a calendar year - end for financial reporting. Assume that in its financial statements, Tilton Products uses the 150% - declining - balance method and the half- year convention. Depreciation expense in Year 1 and Year 2 will be: Multiple Choice $4, 125 in Year 1 and $7.477 in Year 2. $8, 250 in Year 1 and $8, 250 in Year 2. $7,500 in Year 1 and $6, 844 in Year 2. $8, 250 in Year 1 and $7, 477 in Year 2.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 8MC: On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was...
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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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