A company purchased machinery for $10,800,000 on January 1, 2019. The machinery has a useful life of 10 years and an estimated salvage value of $800,000. What is depreciation expense for the year ended December 31, 2020, assuming that the double-declining-balance method is used? a. $2,160,000 c. $1,728,000 e. $1,600,000 b. $3,888,000 d. $2,000,000
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 purchased machinery for $10,800,000 on
January 1, 2019. The machinery has a useful life of 10 years
and an estimated salvage value of $800,000. What is
expense for the year ended December 31, 2020, assuming
that the double-declining-balance method is used?
a. $2,160,000 c. $1,728,000 e. $1,600,000
b. $3,888,000 d. $2,000,000
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