Jay Hawk, maintenance supervisor for Boston Insurance Co., has purchased a riding lawnmower and accessories to be
Question:
Jay Hawk, maintenance supervisor for Boston Insurance Co., has purchased a riding lawnmower and accessories to be used in maintaining the grounds around corporate headquarters. He has sent the following information to the accounting department.
Compute the amount of depreciation expense (related to the mower and accessories) that should be reported on Boston?s December 31, 2020, income statement. Assume straight-line depreciation.
Cost of mower and accessories Estimated useful life Salvage value Date purchased Monthly salary of groundskeeper Estimated annual fuel cost 7/1/20 $4,000 $1,100 5 yrs $0 $150
Step by Step Answer:
Cost Salvage Value Depreciable Cost 4000 0 4000 Depreciable Cost Us...View the full answer
Intermediate Accounting
ISBN: 978-1119503668
17th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel
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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