Random 1
A company buys equipment for $9,000 on July 1. The equipment has a useful life of 3 years and no salvage value. Calculate the depreciation expense for the first year using the straight line method.
$1,500
Explanation: Annual depreciation= $3,000; half year for first year=$1,500
Three Intangible Plant Assets.
Patents, Copyrights, Trademarks, Franchises, Goodwill
An asset costing $10,000 and a useful life of 5 years is depreciated using the declining balance method at 20%. Calculate the first year's depreciation expense.
$2,000
(Explanation: 20% of $10,000 = $2,000)
What are plant assets?
Long-lived assets acquired for use in business operations.
An asset costs $10,000, has a residual value of $2,000, and a useful life of 5 years. Calculate the annual depreciation expense using the straight-line method.
$1,600
(Explanation: ($10,000 - $2,000/ 5 years = $1,600 per year)
What are the three main categories of plant assets?
Tangible Assets, Intangible Assets and Natural Resorces.