2.4 Company A acquired equipment on 01.01.2020 to 320000 €. The equipment had an estimated useful life of 10 years and an estimated residual value of 25.000 €. On 01.01.20X3, company A reassessed that the useful life of the equipment remaining from 01.01.20X3 onwards is 5 years and the estimated residual value is 20.000 €. Calculate the depreciation output for the year ending 31.12.20X3, if A uses the fixed depreciation method for the calculation of depreciation.
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.
2.4 Company A acquired equipment on 01.01.2020 to 320000 €. The equipment had an estimated useful life of 10 years and an estimated residual value of 25.000 €. On 01.01.20X3, company A reassessed that the useful life of the equipment remaining from 01.01.20X3 onwards is 5 years and the estimated residual value is 20.000 €. Calculate the
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