A machine with a purchase price of $9,000 is to be depreciated over its useful working life of 8 years to a book value of zero, using diminishing value depreciation. What is the amount of depreciation in Year 2? a. $1688 b. $1788 c. $1425 d. $1125 Clear my choic
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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A machine with a purchase price of $9,000 is to be
What is the amount of depreciation in Year 2?
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