Beck man Enterprise purchased a depreciable asset on October 1, Year 1 at the cost of $152,000. The asset is expected to have a salvage value of $16300 at the end of its five-year useful life. If the asset is depreciated on the double-declining-balance method, the assets book value on December 31,year 2 will be?
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.
Beck man Enterprise purchased a
Depreciation expense refers to the fall in the value of the asset due to passage of time, wear and tear, obsolescence of time and other reasons.
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