Qt incorporated uses the accrual basis of accounting. qt purchases a piece of equipment on july 1 of the current year for $40,000. if the company expects to use the equipment consistently for four years and depreciation on the equipment is $10,000 per year, how much depreciation expense will qt record in its december 31 financial statements?

Devaluation cost is the measure of deterioration that is accounted for on the pay proclamation. As it were, the sum relates just to the timeframe showed in the heading of the salary statement.The deterioration wrote about the monetary record is the aggregated or the combined aggregate sum of devaluation that has been accounted for as cost on the wage articulation from the time the advantages were obtained until the point that the date of the asset report.

Ritushar Ritushar · Answer 2 · 2019-09-16T08:35:27+02:00

The depreciation expense Qt will record in its financial statement is $5,000.

Further Explanation:

Fixed asset: Fixed asset is an asset that is held in the business for more than a year. Fixed assets are used for the operational process of the business. It includes both tangible and intangible assets. As the assets have a useful life of more than a year then these assets are depreciated on the yearly basis.

Depreciation: It refers to decrease in value of the fixed asset over period of time due to wear, tear and obsolesce of the machinery and equipment. The depreciation is calculated as:

[tex]\text{Depreciation}=\dfrac{\text{Cost of asset-salvage value}}{\text{Useful life}}[/tex]

Calculate the depreciation:

[tex]\begin{aligned}\text{Depreciation for 6 months}&=\text{Annual depreciation}\times\dfrac{6}{12}\\&=\$10,000\times\dfrac{6}{12}\\&=\$5,000\end{aligned}[/tex]

Thus, the deprecation expenses are $5,000 at the end of the year.

Calculate the closing value of the asset:

[tex]\begin{aligned}\text{Value of asset at the end of the year}&=\text{Equipment cost}-\text{Depreciation}\\&=\$40,000-\$5,000\\&=\$35,000\end{aligned}[/tex]

Therefore, the depreciation of $5,000 will be deducted from the net profit and equipment will be recorded at $35,000

Learn more:

1. Learn more about the depreciation expenses

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2. Learn more about the overhead expenses

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3. Learn more about the fixed and variable expenses

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Answer details:

Grade: High School

Subject: Accounting

Chapter: Depreciation

Keywords: QT, the accrual basis of accounting, a piece of equipment, $40,000. the use equipment consistently for four years, depreciation on the equipment is $10,000 per year, depreciation expense, December 31, financial statements.