Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Adjusting Entries: Depreciation

Financial Accounting

3. Accrual Accounting Concepts

Adjusting Entries: Depreciation

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Multiple Choice

What will be the book value of the asset after two years?

$40,000

$30,000

$20,000

$10,000

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Verified step by step guidance

Identify the initial cost of the asset, which is $40,000.

Determine the method of depreciation being used (e.g., straight-line, declining balance). For this example, let's assume straight-line depreciation.

Calculate the annual depreciation expense. If the asset has a useful life of 4 years, the annual depreciation would be $40,000 divided by 4, which is $10,000 per year.

Subtract the annual depreciation from the initial cost to find the book value at the end of each year. After the first year, the book value would be $40,000 - $10,000 = $30,000.

Repeat the process for the second year. Subtract another $10,000 from the book value at the end of the first year to find the book value at the end of the second year, which would be $30,000 - $10,000.