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Fixed assets accounting test
long term or relatively permanent tangible assets. They are used by the business or company and are not sold to customers.
The adjusting entry used to record depreciation...
debit to depreciation expense and credit to accumulated depreciation.
When a fixed asset gets transferred to an expense account after it loses its value.
occurs from wear and tear while in use.
when a fixed asset can no longer provide the service that it is intended to do.
Three factors in determining the amount of depreciation expense to be recognized each period.
-the fixed asset's initial cost.
-it's expected useful life
-it's estimated value at the end of its useful life.
the estimated value at the end of a fixed asset's useful life.
Straight line method
(original cost-residual value) / estimated life in years`
The cost of acquiring fixed assets, adding to a fixed asset, improving a fixed asset, or extending a fixed assets useful life.
An expenditure that improves a fixed asset's operating efficiency for the remainder of its useful life.
An expenditure that increases the useful life of an asset beyond its original estimate.