Assume the cost of a company’s long-term asset is $20,000, expected salvage value is $1,000, and expected useful life is 10 years. Which of the following is the amount of depreciation in the second year of useful life of the asset if the company applies Double-Declining Balance Depreciation method? A) $1,900 B) $2,000 C) $1,710 D) $1,800
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.
Assume the cost of a company’s long-term asset is $20,000, expected salvage value is $1,000, and expected useful life is 10 years. Which of the following is the amount of
A) $1,900
B) $2,000
C) $1,710
D) $1,800
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