A machine is purchased on September 30, 2024, for $60,000. Useful life is estimated at four years and no residual value is anticipated. The straight line depreciation method is used. The company's fiscal year ends on December 31. Depreciation expense for 2024 should be: $3,750

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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.