A fixed asset costing $80,000 and having an estimated salvage value of $6000 has a life expectancy of 10 years. Compare the results of Double declining, Sum of the year digits depreciation methods by filling in below columns: Sum of the year's Digits method: Year Depreciation Expense Accumulated Depreciation Book value End of the year 1 2 3 4 Double Declining Method: Year Depreciation Expense Accumulated Depreciation Book value End of the year 1 2 3 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.
A fixed asset costing $80,000 and having an estimated salvage value of $6000 has a life expectancy of 10 years. Compare the results of Double declining, Sum of the year digits
Sum of the year's Digits method:
| Year | Depreciation Expense | Book value End of the year | |
| 1 | |||
| 2 | |||
| 3 | |||
| 4 |
Double Declining Method:
| Year | Depreciation Expense | Accumulated Depreciation | Book value End of the year |
| 1 | |||
| 2 | |||
| 3 | |||
| 4 |
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