A company purchased a piece of equipment for $30,000 on May 1, 2019. Management estimates a salvage value of $4,500, a useful life of four years and estimated production output of 15,000 units. It produced 3,000 units in 2019. Where applicable, it applies the half‐year rule. What is depreciation expense for 2019 using the straight line method (rounded to nearest dollar)? $3,188 $5,100 $6,375 $7,500
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 purchased a piece of equipment for $30,000 on May 1, 2019. Management estimates a salvage value of $4,500, a useful life of four years and estimated production output of 15,000 units. It produced 3,000 units in 2019. Where applicable, it applies the half‐year rule. What is
$3,188
$5,100
$6,375
$7,500
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