(a) Straight-line depreciation for 2022 (b) (c) (d) Activity method for 2023, assuming that machine usage was 800 hours Sum-of-the-years'-digits for 2023 Double-declining-balance for 2023
(a) Straight-line depreciation for 2022 (b) (c) (d) Activity method for 2023, assuming that machine usage was 800 hours Sum-of-the-years'-digits for 2023 Double-declining-balance for 2023
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text:Concord SpA purchased a new machine for its assembly process on August 1, 2022. The cost of this machine was €132,000. The
company estimated that the machine would have a residual value of €21,120 at the end of its service life. Its life is estimated at 5 years,
and its working hours are estimated at 18,480 hours. Year-end is December 31.
Compute the depreciation expense under the following methods. Each of the following should be considered unrelated. (Round
depreciation rate per hour to 2 decimal places, e.g. 5.35 for computational purposes. Round your answers to O decimal places, e.g. 45,892.)
(a)
(b) Activity method for 2023, assuming that machine usage was 800 hours
(c)
Straight-line depreciation for 2022
(d)
Sum-of-the-years'-digits for 2023
Double-declining-balance for 2023
(11)
€
(11)
€
(1)
€
(1₁)
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