2. Suppose the business purchased a new welding machine with a value of $60,000, on January 1, 2019. It is estimated that the welding machine will last 10 years in the business, at which time it can be sold for $10, 000. a) Calculate the Annual Depreciation Expense for 1 years, b) Create the year 1 journal entry, c) Post how each of the 3 years will look on the balance sheet (refer to slide 25 to do this
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.
2. Suppose the business purchased a new welding machine with a value of $60,000, on January 1,
2019. It is estimated that the welding machine will last 10 years in the business, at which time it
can be sold for $10, 000.
a) Calculate the Annual
b) Create the year 1
c) Post how each of the 3 years will look on the
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