Compute depreciation under: (i) straight line method (ii) unit of output (iii) working hours (iv) sum of the years digit (v) double declining balance method
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.
Silverman company purchased machine for Rp. 162.000 on January 1, 2019. Its estimated that the machinery will have a useful life of 20 years, residual value of Rp. 15.000, production of 84.000 units, and working hours of 42.000. During 2019, the company uses the machinery for 14.300 hours, and machinery produces 20.000 units. Compute
(i)
(ii) unit of output
(iii) working hours
(iv) sum of the years digit
(v) double declining balance method
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