Company U purchased equipment for $805,000 on January 1, 2021. The equipment is expected to have a six-year life and a residual value of $50,000. Calculate the book value of the equipment for the year ended December 31, 2022, assuming the company uses the double- declining balance depreciation method (round to the nearest dollar): A. $351,813 OB. $357,813 OC. $349,813 D. $353,813
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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