A Plant Asset Acquired on October 1, 2014, at a Cost

question 16

Essay

A plant asset acquired on October 1, 2014, at a cost of ¥6,000,000 has an estimated useful life of 10 years. The residual value is estimated to be ¥600,000 at the end of the asset's useful life.
Instructions
Determine the depreciation expense for the first two years using:
(a) the straight-line method.
(b) the double-declining-balance method.

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Definitions:

Calendar Year

A period of 365 days (366 in a leap year) starting from January 1st to December 31st, used as a financial or operational year by some organizations.

Insurance Expense

The cost incurred by a company to insure its assets, operations, and potentially its employees, recognized as an expense.

Adjusting Entry

An accounting entry made to correct, update, or complete financial records at the end of an accounting period.

Net Income

The total amount of profit earned by a company after all expenses and taxes have been deducted from total revenue.