Refer to the information in QS 10-3. Compute the year 2011 depreciation using the units of-production method.
Question:
Refer to the information in QS 10-3. Compute the year 2011 depreciation using the units of-production method.
Data From Quick Study 10-3:
On January 2, 2011, the Crossover Band acquires sound equipment for concert performances at a cost of $55,900. The band estimates it will use this equipment for four years, during which time it anticipates performing about 120 concerts. It estimates that after four years it can sell the equipment for $1,900. During year 2011, the band performs 40 concerts. Compute the year 2011 depreciation using the straight-line method
Step by Step Answer:
To compute the year 2011 depreciation using the unitsofproduction method we first need ...View the full answer
Fundamental Accounting Principles
ISBN: 978-0078110870
20th Edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
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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