A piece of equipment bought for $104,000 is expected to have a $2,000 salvage value at the end of its 10-year useful life. Assume that the oven will be able to make 400,000 pizzas in its life time, and made 21,000 pizzas in 2021. Compute and record the journal entry for depreciation using activities-based Method for 2021. Round to the nearest whole 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 piece of equipment bought for $104,000 is expected to have a $2,000 salvage value at the end of its 10-year useful life. Assume that the oven will be able to make 400,000 pizzas in its life time, and made 21,000 pizzas in 2021.
Compute and record the
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