Company F purchased equipment for 110,000 on 1/1/2020. The equipment has a useful life of 4 years and a residual value of 10,000 and will produce 100,000 total units of production over the useful life. For 2020 the equipment had 25,000 units of production. Using the units-of-production method of depreciation, what is the amount of depreciation expense for 2020?
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.
Company F purchased equipment for 110,000 on 1/1/2020. The equipment has a useful life of 4 years and a residual value of 10,000 and will produce 100,000 total units of production over the useful life. For 2020 the equipment had 25,000 units of production. Using the units-of-production method of
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
