A used drill press costs $60,000, and delivery and installation charges add $5000. The salvage value after 10 years is $10,000. Compute the accumulated depreciation through Year 5 using (a) Straight-line depreciation (b) Double declining balance depreciation
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 used drill press costs $60,000, and delivery and installation charges add $5000. The salvage value after 10 years is $10,000. Compute the
(a) Straight-line depreciation
(b) Double declining balance depreciation
(c) 60% bonus depreciation with the balance using 7-year MACRS
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