abc company purchased an equipment on september 1, 2015 for $230000. the salvage value of the equipment is $10000 and the estimated useful life is 10 years. what is the book value of the equipment at december 31 2016, if the company uses sum of years digits method to record 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.
abc company purchased an equipment on september 1, 2015 for $230000. the salvage value of the equipment is $10000 and the estimated useful life is 10 years. what is the book value of the equipment at december 31 2016, if the company uses sum of years digits method to record
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