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Machine was purchased for 50000 installation expenses amounted to 2000 and wages wages of 4000 was paid on installation. The scrap value at the end of its useful life of 10years is 6000. Repairs of 6000 was made after 6 months from the purchase date. Calculate the depreciation?
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Machine was purchased for 50000 installation expenses amounted to 2000...
Depreciation Calculation for a Machine
Initial Cost of Machine
- Machine purchase cost: $50,000
- Installation expenses: $2,000
- Wages paid on installation: $4,000
- Total cost: $56,000
Estimated Scrap Value
- Scrap value at the end of useful life: $6,000
Depreciable Amount
- Depreciable amount = Initial cost - Scrap value
- Depreciable amount = $56,000 - $6,000
- Depreciable amount = $50,000
Depreciation per year
- Straight-line depreciation method: Annual depreciation = Depreciable amount / Useful life
- Annual depreciation = $50,000 / 10 years
- Annual depreciation = $5,000
Repairs
- Repairs made after 6 months from purchase date: $6,000
- Repairs are not capitalized and do not affect the depreciable amount or useful life.
Journal Entries
- At the end of each year, record the depreciation expense:
- Depreciation Expense account: $5,000
- Accumulated Depreciation account: $5,000
Note: Depreciation is a non-cash expense that reflects the wear and tear of an asset over its useful life. The straight-line method assumes that the asset depreciates evenly over its useful life. Repairs and maintenance costs are not capitalized and do not affect the depreciable amount or useful life.
Initial Cost of Machine
- Machine purchase cost: $50,000
- Installation expenses: $2,000
- Wages paid on installation: $4,000
- Total cost: $56,000
Estimated Scrap Value
- Scrap value at the end of useful life: $6,000
Depreciable Amount
- Depreciable amount = Initial cost - Scrap value
- Depreciable amount = $56,000 - $6,000
- Depreciable amount = $50,000
Depreciation per year
- Straight-line depreciation method: Annual depreciation = Depreciable amount / Useful life
- Annual depreciation = $50,000 / 10 years
- Annual depreciation = $5,000
Repairs
- Repairs made after 6 months from purchase date: $6,000
- Repairs are not capitalized and do not affect the depreciable amount or useful life.
Journal Entries
- At the end of each year, record the depreciation expense:
- Depreciation Expense account: $5,000
- Accumulated Depreciation account: $5,000
Note: Depreciation is a non-cash expense that reflects the wear and tear of an asset over its useful life. The straight-line method assumes that the asset depreciates evenly over its useful life. Repairs and maintenance costs are not capitalized and do not affect the depreciable amount or useful life.
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Machine was purchased for 50000 installation expenses amounted to 2000 and wages wages of 4000 was paid on installation. The scrap value at the end of its useful life of 10years is 6000. Repairs of 6000 was made after 6 months from the purchase date. Calculate the depreciation?
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Machine was purchased for 50000 installation expenses amounted to 2000 and wages wages of 4000 was paid on installation. The scrap value at the end of its useful life of 10years is 6000. Repairs of 6000 was made after 6 months from the purchase date. Calculate the depreciation? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Machine was purchased for 50000 installation expenses amounted to 2000 and wages wages of 4000 was paid on installation. The scrap value at the end of its useful life of 10years is 6000. Repairs of 6000 was made after 6 months from the purchase date. Calculate the depreciation? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Machine was purchased for 50000 installation expenses amounted to 2000 and wages wages of 4000 was paid on installation. The scrap value at the end of its useful life of 10years is 6000. Repairs of 6000 was made after 6 months from the purchase date. Calculate the depreciation?.
Machine was purchased for 50000 installation expenses amounted to 2000 and wages wages of 4000 was paid on installation. The scrap value at the end of its useful life of 10years is 6000. Repairs of 6000 was made after 6 months from the purchase date. Calculate the depreciation? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Machine was purchased for 50000 installation expenses amounted to 2000 and wages wages of 4000 was paid on installation. The scrap value at the end of its useful life of 10years is 6000. Repairs of 6000 was made after 6 months from the purchase date. Calculate the depreciation? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Machine was purchased for 50000 installation expenses amounted to 2000 and wages wages of 4000 was paid on installation. The scrap value at the end of its useful life of 10years is 6000. Repairs of 6000 was made after 6 months from the purchase date. Calculate the depreciation?.
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