You purchased a piece of equipment that cost 129,250.00 The expected useful life is 6.00 The estimated salvage value is 12,250.00 Estimated units of production are 175,500.00 Year Units Produced 1 35,000.00 2 35,000.00 3 30,000.00 4 30,000.00 5 25,000.00 6 25,000.00 180,000.00
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.
You purchased a piece of equipment that cost 129,250.00
The expected useful life is 6.00
The estimated salvage value is 12,250.00
Estimated units of production are 175,500.00
Year Units Produced
1 35,000.00
2 35,000.00
3 30,000.00
4 30,000.00
5 25,000.00
6 25,000.00
180,000.00
REQUIRED
1. Compute the
a. Straight Line
b. Units of productions
c. Double Declining Balance
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