Show depreciation formula with example, Accounting Basics

Assignment Help:

Q. Show depreciation formula with example?

The depreciation formula (straight-line) to calculate straight-line depreciation for a one-year period is:

Annual deprecation = (Asset cost - Estimated residual value) / Estimated years of useful life

To exemplify the use of this formula recall that on December 1 Micro Train Company buy four small trucks at a cost of USD 40000 the journal entry was:

2340_Depreciation formula.png

The approximate residual value for each truck was USD 1000 consequently Micro Train approximate the total residual value for all four trucks at USD 4000. The company approximate the useful life of each truck to be four years. By means of the straight-line depreciation formula Micro

Train calculated the annual depreciation on the trucks as follows

Annual deprecation = USD40000 -USD 4000 4 years = USD9000

The sum of depreciation expense for one month would be 1/12 of the annual amount. Therefore depreciation expense for December is USD 9000 ÷ 12 = USD 750.


Related Discussions:- Show depreciation formula with example

Show employment opportunities in accounting, Q. Show Employment opportuniti...

Q. Show Employment opportunities in accounting? Throughout the last half-century accounting has gained the same professional status as the medical and legal professions. At pre

Annual interest of 5% paid if balance exceeds, Annual interest of 5% paid i...

Annual interest of 5% paid if balance exceeds 800, $7 monthly fee if account falls below minimum balance, average monthly balance $1,160, account falls below $800 during 5 months

Taxes, ACCT225-1204A-01 Introduction to Tax Task Name: Phase 5 Individual ...

ACCT225-1204A-01 Introduction to Tax Task Name: Phase 5 Individual Project Deliverable Length: All applicable tax forms and a Word document of 1–2 pages Details: Weekly tasks or

Explain about realization principle, Q. Explain about realization principle...

Q. Explain about realization principle? Realization of revenue Under the realization principle the accountant doesn't recognize (record) revenue until the seller obtains the ri

What do you recognize by intercompany settlement, A key functional area of ...

A key functional area of SAP for Utilities that supports cross-company exchange of settlement data based on international standards like as EDI, XML, and Microsoft Excel. Interc

Accounting, Accounting Accounting has evolved and emerged within respo...

Accounting Accounting has evolved and emerged within response to the social & economic requirement of the society. The accounting procedure has its own syntax. The primary sys

A vendor reduces an item listed at $140 on july 1st by 20%, A vendor reduce...

A vendor reduces an item listed at $140 on July 1st by 20%, and then reduces it another 25% on September 1st. What is the sale price of the good after the last reduction? A. $7

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd