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Lesson 18 2
1.
LESSON 18-2 Calculating Depreciation Expense CENTURY
21 ACCOUNTING © 2009 South-Western, Cengage Learning
2.
2 STRAIGHT-LINE DEPRECIATION page 538 Calculating
Annual Depreciation Expense 1. Subtract the asset’s estimated salvage value from the original cost. 2. Divide the estimated total depreciation expense by the years of estimated useful life. Original Cost – Estimated Salvage Value = $3,250.00 – $250.00 = Estimated Total Depreciation Expense $3,000.00 ÷ Years of Estimated = Useful Life ÷ 5 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning = Estimated Total Depreciation Expense $3,000.00 1 Annual Depreciation Expense $600.00 2 LESSON 18-2
3.
3 CALCULATING DEPRECIATION EXPENSE FOR
PART OF A YEAR page 539 Calculating Partial Year’s Depreciation Expense 1. Divide the annual depreciation expense by 12. 2. Multiply the monthly depreciation expense by the number of months the plant asset is used in a year. Annual Depreciation Expense ÷ Months in a Year = Monthly Depreciation Expense $600.00 ÷ 12 = $50.00 Monthly Depreciation Expense $50.00 × Number of Months = Asset Is Used × 5 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning = 1 Partial Year’s Depreciation Expense $250.00 2 LESSON 18-2
4.
CALCULATING ACCUMULATED DEPRECIATION 20X2 Accumulated
+ Depreciation $1,200.00 + 20X3 Depreciation Expense $600.00 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 page 540 = 20X3 Accumulated Depreciation = $1,800.00 LESSON 18-2
5.
5 CALCULATING BOOK VALUE page
540 Original Cost – Accumulated Depreciation = Ending Book Value $3,250.00 – $1,800.00 = $1,450.00 Beginning Book Value – Annual Depreciation = Ending Book Value $2,050.00 – $600.00 = $1,450.00 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 18-2
6.
5 CALCULATING BOOK VALUE page
540 Original Cost – Accumulated Depreciation = Ending Book Value $3,250.00 – $1,800.00 = $1,450.00 Beginning Book Value – Annual Depreciation = Ending Book Value $2,050.00 – $600.00 = $1,450.00 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 18-2
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