Show Notes
Today we tackle depreciation and amortization, and we discuss fixed assets.
Facts for following examples: Asset cost of $85,000, salvage value of $10,000, and a useful life of 5 years.
Note: "Depr" represents depreciation expense, "A/D" represents accumulated depreciation, and "B/V" represents book value at the end of the year.
I tried to align the columns as best as I could, but they appear differently on different platforms.
Assuming the asset was put into service January 1 of year 1 and utilizing the straight line method:
Year Factor Depr A/D B/V 1 0.2 15,000 15,000 70,000 2 0.2 15,000 30,000 55,000 3 0.2 15,000 45,000 40,000 4 0.2 15,000 60,000 25,000 5 0.2 15,000 75,000 10,000
Assuming the asset was put into service October 1 of year 1 and utilizing the straight line method:
Year Factor Depr A/D B/V 1 0.2 3,250 3,750 81,250 2 0.2 15,000 18,750 66,250 3 0.2 15,000 33,750 51,250 4 0.2 15,000 48,750 36,250 5 0.2 15,000 63,750 21,250 6 0.2 11,250 75,000 10,000
Assuming the asset was put into service January 1 of year 1 and utilizing the double declining (don't!) balance method:
Year Factor Depr A/D B/V 1 0.4 34,000 34,000 51,000 2 0.4 20,400 54,400 30,600 3 0.4 12,240 66,640 18,360 4 0.4 7,344 73,984 11,016 5 0.4 1,016 75,000 10,000
Assuming the asset was put into service January 1 of year 1 and utilizing the sum of the years' digits method:
Year Factor Depr A/D B/V 1 5/15 25,000 25,000 60,000 2 4/15 20,000 45,000 40,000 3 3/15 15,000 60,000 25,000 4 2/15 10,000 70,000 15,000 5 1/15 5,000 75,000 10,000
More from Accounting 101 with Jimmy Stewart
I've read a lot of boring stuff so that you don't have to! Today we will summarize some of the useful information in the FASB Concepts Statements and other literature.
Example: You own a sole proprietorship. For this period, you had revenue of $100,000, wage expense of $40,000, and computer expense of $30,000 (net income of $30,000). You also contributed $10,000 to the business this period.
Today we will go over the adjusting process. This is where we make our adjusting journal entries to get from our unadjusted trial balance to our adjusted trial balance, which contains the figures we use on the financial statements and tax returns.
Today we will discuss the accounting cycle. This is the process taken each period to record transactions, prepare the financial statements, and to reset the temporary accounts to zero for the next period.