A piece of equipment was purchased on 1/1/21 for $100,000, sales tax paid was $5,500, and delivery fees paid were $500. The equipment has an estimated useful life of 5 years or 5,000 machine hours, and an estimated salvage value of $500. Calculate depreciation expense for year 1 using the double declining balance depreciation method. 42,400 40,000 42,200 21,200
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.
Subject: accounting
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