Calculate and record depreciation using the methods of:
Chapter1: Financial Statements And Business Decisions
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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.
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Transcribed Image Text:Calculate and record depreciation using the methods of: 1. Straight-line, 2. units-of - production 3. double - declining - balance Sigma Corporation, purchased a machine
for $50,000 on January 1, 2001, with an estimated useful life of 5 years and a salvage value of $5,000. The machine produced 20, 000 units in 2001, 15,000 units in
2002, 10,000 units in 2003, 5,000 units in 2004, and 2, 500 units in 2005.
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