Asif Company acquired machinery on January 1, 2014 with an amount AED84,000. The useful life of the machinery is expected to be 4 years. The salvage value at the end of the life of the machinery is expected to be AED4,000. The machinery can produce maximum 80,000 units during its useful life. Required: - a) Calculate depreciation expense for the year 2014, 2015, 2016, and 2017 by using straight-line method. Also calculate asset's book value at the end of these years. (Hint: Make a Table to show calculations) b) Calculate depreciation expense for the year 2014, 2015, 2016, and 2017 by using units of production method if following number of units were produced. Also calculate asset's book value at the end of these years. 2014: 22,000 units produced 2015: 18,000 units produced 2016: 15,000 units produced 2017: 25,000 units produced (Hint: Make a Table to show calculations) c) Calculate depreciation expense for the year 2014, 2015, 2016, and 2017 by using double declining balance method. Also calculate asset's book value at the end of these years. (Hint: Make a Table to show calculations)

Asif Company acquired machinery on January 1, 2014 with an amount AED84,000. The useful life of the machinery is expected to be 4 years. The salvage value at the end of the life of the machinery is expected to be AED4,000. The machinery can produce maximum 80,000 units during its useful life. Required: - a) Calculate depreciation expense for the year 2014, 2015, 2016, and 2017 by using straight-line method. Also calculate asset's book value at the end of these years. (Hint: Make a Table to show calculations) b) Calculate depreciation expense for the year 2014, 2015, 2016, and 2017 by using units of production method if following number of units were produced. Also calculate asset's book value at the end of these years. 2014: 22,000 units produced 2015: 18,000 units produced 2016: 15,000 units produced 2017: 25,000 units produced (Hint: Make a Table to show calculations) c) Calculate depreciation expense for the year 2014, 2015, 2016, and 2017 by using double declining balance method. Also calculate asset's book value at the end of these years. (Hint: Make a Table to show calculations)

Name: Asif Company acquired machinery on January 1, 2014 with an amount AED
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Description: Asif Company acquired machinery on January 1, 2014 with an amount AED84,000. Theuseful life of the machinery is expected to be 4 years. The salvage value at the end of thelife of the machinery is expected to be AED4,000. The machinery can produce ma

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

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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Question

Asif Company acquired machinery on January 1, 2014 with an amount AED84,000. The
useful life of the machinery is expected to be 4 years. The salvage value at the end of the
life of the machinery is expected to be AED4,000. The machinery can produce maximum
80,000 units during its useful life.
Required: -
a) Calculate depreciation expense for the year 2014, 2015, 2016, and 2017 by using
straight-line method. Also calculate asset's book value at the end of these years.
(Hint: Make a Table to show calculations)
b) Calculate depreciation expense for the year 2014, 2015, 2016, and 2017 by using units
of production method if following number of units were produced. Also calculate
asset's book value at the end of these years.
2014: 22,000 units produced
2015: 18,000 units produced
2016: 15,000 units produced
2017: 25,000 units produced
(Hint: Make a Table to show calculations)
c) Calculate depreciation expense for the year 2014, 2015, 2016, and 2017 by using
double declining balance method. Also calculate asset's book value at the end of these
years. (Hint: Make a Table to show calculations)

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