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Accounting multiple choice: depreciation, trading securities, COGS, inventory, allowance© BrainMass Inc. brainmass.com November 24, 2022, 11:33 am ad1c9bdddf
SL Depreciation = (Cost of Asset-Residual Value)/Useful Life =
= (15000-3000)/5 = 2400
Thus the Depreciation exp in year 3 is 2400.
The estimated useful life is based on the economic life of an asset not its physical life. Useful Life reflects the useful life of the asset to its holder as need to be determined. Thus such factors to be considered in determining an asset's usefulness to its holder include the assets present condition, technology and industry trends, and past experience with similar assets. The useful life required for tax purposes can be a helpful guide, but it is not a factor.
he solution does a good job of explaining and calculating the answers to the problems.