On January 1, the Matthews Band pays $65,800 for sound equipment. The band estimates it will use
Question:
On January 1, the Matthews Band pays $65,800 for sound equipment. The band estimates it will use this equipment for four years and perform 200 concerts. It estimates that after four years it can sell the equipment for $2,000. During the first year, the band performs 45 concerts.
Compute the first-year depreciation using the straight-line method.
Step by Step Answer:
Straightline ...View the full answer
Financial and Managerial Accounting
ISBN: 978-1260247855
8th edition
Authors: John J Wild, Ken W. Shaw
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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