A Kubota tractor acquired on January 8 at a cost of $306,000 has an estimated useful life of 10 years. Assuming that it will have no residual value. a. Determine the depreciation for each of the first two years by the straight-line method. b. Determine the depreciation for each of the first two years by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your final answers to the nearest dollar.
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 Kubota tractor acquired on January 8 at a cost of $306,000 has an estimated useful life of 10 years. Assuming that it will have no residual value.
a. Determine the
b. Determine the depreciation for each of the first two years by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your final answers to the nearest dollar.
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