A contracting company purchased a new equipment at a cost of $200,000. The delivery and installation costs incurred by the company for the equipment is $40,000. Assuming the equipment has a service life of 10 years and a CCA rate of 30%, What is the remaining UCC value at the end of year 4?
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.
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