Asked by Rachel Oftedahl on Apr 28, 2024
Verified
The December 31 2016 balance sheet of Jensen Company showed Equipment of $76000 and Accumulated Depreciation of $18000. On January 1 2017 the company decided that the equipment has a remaining useful life of 6 years with a $4000 salvage value.
Instructions
Compute the (a) depreciable cost of the equipment and (b) revised annual depreciation.
Depreciable Cost
The total cost of a tangible fixed asset minus its estimated salvage value at the end of its useful life.
Revised Annual Depreciation
An updated calculation of depreciation expense for an asset, altering the original depreciation schedule due to changes in estimation of useful life or resale value.
Accumulated Depreciation
The total depreciation for a fixed asset that has been charged to expense since the asset was acquired and made available for use.
- Account for depreciation costs and deduce the book value of fixed capital.
- Determine and record depreciation for partial periods and alterations in forecasts.
Verified Answer
Book value, 1/1/17($76,000−$18,000)$58,000 Less salvage value 4,000‾ Depreciable cost $54,000‾‾\begin{array}{ll}\text { Book value, } 1 / 1 / 17(\$ 76,000-\$ 18,000) & \$ 58,000 \\\text { Less salvage value } & \underline{4,000}\\\text { Depreciable cost } &\underline{ \underline{\$ 54,000} }\end{array} Book value, 1/1/17($76,000−$18,000) Less salvage value Depreciable cost $58,0004,000$54,000 (b) Revised annual depreciation = $9000 ($54000 ? 6)
Learning Objectives
- Account for depreciation costs and deduce the book value of fixed capital.
- Determine and record depreciation for partial periods and alterations in forecasts.
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