Consider the following information: Cost Basis, I: $ 201,033 Depreciation Life, N: 8 years Scrap Value, S: 0 Using the double-declining depreciation method, switch to the straight-line depreciation method and calculate the annual depreciation allowances and the book values obtained.
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.
Consider the following information:
Cost Basis, I: $ 201,033
Scrap Value, S: 0
Using the double-declining depreciation method, switch to the
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