A certain company makes it a policy that for any new piece of equipment, the annual depreciation cost should not exceed 10% of the First Cost while the Salvage Value is 20% of the First Cost . Determine the minimum length of service life in years ( n ), necessary, if the depreciation method used is: SLM, DBM and DDBM.
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.
A certain company makes it a policy that
for any new piece of equipment, the annual
of the First Cost while the Salvage Value is 20% of the First Cost . Determine
the minimum length of service life in years ( n ), necessary, if the
depreciation method used is: SLM, DBM and DDBM.
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