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In P4-2A you are going to work with the concept of depreciation.  See Illustration 4-8 on page 172 of our textbook to help you with this concept.  Essentially depreciation is part of the matching principle.  When a company purchases a piece of equipment that will be involved in its production of some sort of good that it sells, the cost of that equipment is an expense that is related to selling that good.  However, under the accrual method of accounting you would NOT match the entire expense of buying that piece of equipment with the revenue that it helped produce in the same way that we have earlier learned to match expenses with revenue.  Essentially items such as equipment have what is called a “useful life.”  Essentially the equipment may be able to be used for years.  Once this “useful life” is determined, a Company will expense the cost of such equipment over the amount of time that is the useful life.  A piece of equipment may be bought for $12,000 and have a useful life of 60 months.  For each month after the purchase of the equipment, 1/60thof the $12,000 will be debited to expense with a corresponding credit to accumulated depreciation for 1/60thof the $12,000.

The use of the answer template is MANDATORY.  The assignment will not be accepted if this template is not used when completing the assignment.  Attached is a template for you to fill out when doing the assignment.  This is an Excel workbook that contains two different worksheets; one worksheet for each exercise/problem this week  Please use this template for week 4’s assignment and upload it when you are finished.  Don’t forget to save your work after completing the template and before you upload it. Thanks.

I need this by 10:00pm tomorrow…


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