A company’s property records revealed the following information about its plant assets: Cost Salvage Value Purchase Date Estimated Life Depreciation Method A $ 42,000 $ 3,000 10/1 3 years Straight-line B 86,000 8,600 7/01 5 years Double Declinign Balance Calculate the depreciation expense for each machine in Year 1 and Year 2 for the year ended December 31.
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’s property records revealed the following information about its plant assets:
| Cost | Salvage Value | Purchase Date | Estimated Life | ||
| A | $ 42,000 | $ 3,000 | 10/1 | 3 years | Straight-line |
| B | 86,000 | 8,600 | 7/01 | 5 years | Double Declinign Balance |
Calculate the depreciation expense for each machine in Year 1 and Year 2 for the year ended December 31.
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