A secondhand bulldozer acquired at the beginning of the fiscal year at a cost of $56,000 has anestimated salvage value of $6,500 and an estimateduseful life of 12 years. Determine the following.(a) The amount of annual depreciation by thestraight-line method.(b) The amount of depreciation for the third year,computed by the double-declining-balancemethod.
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 secondhand bulldozer acquired at the beginning of the fiscal year at a cost of $56,000 has an
estimated salvage value of $6,500 and an estimated
useful life of 12 years. Determine the following.
(a) The amount of annual
straight-line method.
(b) The amount of depreciation for the third year,
computed by the double-declining-balance
method.
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