A machine was bought on 1 July 2017 for $40,000 . The policy is to depreciate the motor van at 20% on reducing balance method and depreciation is charged in full in the year of purchase .. calculate the depreciation charge for the yeyars 2017,2018,2019 .. show the three years for machine account,accumulated depreciation account, spol extract, and sofp extract
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 machine was bought on 1 July 2017 for $40,000 . The policy is to
Step by step
Solved in 5 steps with 6 images
