Banko Inc. manufactures sporting goods. The following information applies to a machine purchased on January 1, 2018: purchase price 83200 delivery cost 7000 installation charge 3000 estimated life 5 years estimated units 147000 salvage estimate 5000 determine the amount of depreciation expense for 2018 and 2019 using the following methods: straight line double declining balance units of production
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.
Banko Inc. manufactures sporting goods. The following information applies to a machine purchased on January 1, 2018:
| purchase price | 83200 |
| delivery cost | 7000 |
| installation charge | 3000 |
| estimated life |
5 years |
| estimated units | 147000 |
| salvage estimate | 5000 |
determine the amount of
straight line
double declining balance
units of production
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