ABC Company uses double declining balance deprecistion method. The compury purchused machinery on January 1.2020 at a total cost of$32000. The machinery was ectimated to have a senisual nitue of$4000and an estimated useful life of 8 years What is depreciation expense of the machinery for the year of 2021 ? Select one: a.$6,000b.$7,000c.$6,250d.$8,000

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A:

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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.