Portland Co. uses the straight-line depreciation method for depreciable assets. All assets are depreciated individually except manufacturing
Question:
Required:
1. What factors should have influenced Portland's selection of the straight-line depreciation method?
2.
a. What benefits should derive from using the composite method rather than the individual basis for manufacturing machinery?
b. How should Portland have calculated the manufacturing machinery's annual depreciation in its first year of operation?
Step by Step Answer:
Requirement 1 Portland should have selected the straightline depreciation method when approximately ...View the full answer
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
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