Atomic Corporation has a June 30th year end. It has used straight line depreciation on its reactor since its purchase for $912,800 January 1, 2018 based on expectations of a ten year life. No salvage value was estimated. At the beginning of the fiscal year of July 1st, 2022 , management realized that that the reactor life was in reality only 4 years. This is considered a change in accounting estimate and you are asked to solve it. Required 1: What is the amount of Depreciation Expense reported for the year ended June 30th, 2022? $ Required 2: What is the amount of Depreciation Expense to be reported for the year ended June 30th, 2023? $ Required 3: What is the amount of Accumulated Depreciation that is retroactively recognized on July 1st 2022 when the remaining useful life is re-estimated? $ Required 4: What is the Net Book Value of the reactor on June 30th, 2022? $ Required 5: What is the Net Book Value of the reactor on December 31st, 2022? $ Required 6: What is the Net Book Value of the reactor on June 30th, 2023? $
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Atomic Corporation has a June 30th year end. It has used straight line
Required 1: What is the amount of Depreciation Expense reported for the year ended June 30th, 2022? $
Required 2: What is the amount of Depreciation Expense to be reported for the year ended June 30th, 2023? $
Required 3: What is the amount of
Required 4: What is the Net Book Value of the reactor on June 30th, 2022? $
Required 5: What is the Net Book Value of the reactor on December 31st, 2022? $
Required 6: What is the Net Book Value of the reactor on June 30th, 2023? $
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