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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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EXERCISE 9-4

Purpose: (L.O. 2) This exercise will provide an illustration of the computations for depreciation of partial periods using two common methods.

Scanlan Company purchased a new plant asset on April 1, 2014, at a cost of $690,000. It was estimated to have a service life of 20 years and a salvage value of $60,000. Scanlan's accounting period is the calendar year.

Instructions

  1. Compute the amount of depreciation for this asset for 2014 and 2015 using the straight-line method.
  2. Compute the amount of depreciation for this asset for 2014 and 2015 using the double-declining-balance method.
  3. Briefly define depreciation as the term is used in accounting.

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