A company places an asset that costs $200,000 in service on Day 1 of Year 1. The company estimates that the asset will have a useful life of five years and a residual value of $15,000. The company uses the double-declining balance method of depreciation. How much depreciation expense should the company recognize in Year 1? $37,000 $61,667 $74.000 $80,000
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 company places an asset that costs $200,000 in service on Day 1 of Year 1. The company estimates that the asset will have a useful life of five years and a residual value of $15,000. The company uses the double-declining balance method of
How much depreciation expense should the company recognize in Year 1?
$37,000
$61,667
$74.000
$80,000
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