Proration occurs because it is impossible to accurately estimate the future overhead costs and production activity; it is either the overhead is over applied or under applied. The variance will have to be adjusted for at the end of the financial year.
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Answer:
to calculate depreciation using the sum-of-the-years'-digits method:
n(n+1) divided by 2 = [12(13)] / 2 = 78
depreciable value = cost - salvage value = $469,000 - $40,000 = $429,000
- depreciation year 1 = 12/78 x $429,000 = $66,000
- depreciation year 2 = 11/78 x $429,000 = $60,500
- depreciation year 3 = 10/78 x $429,000 = $55,000
the formula used to calculate depreciation using the double-declining-balance method is:
2 x cost of the asset x depreciation rate
- depreciation year 1 = 2 x $469,000 x 1/12 = $78,167
- depreciation year 2 = 2 x ($469,000 - $78,167) x 1/12 = $65,139
- depreciation year 3 = 2 x ($390,833 - $65,139) x 1/12 = $54,282
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Answer:
Financial accounting is responsible for preparing the organization's financial statements—including the income statement, the statement of owner's equity, the balance sheet, and the statement of cash flows—that summarize a company's past performance and evaluate its current financial condition.
Explanation:
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