Cost of asset: $14,000 Estimated Useful life: 10 years Estimated Total Units of activity : 5000 units Estimated Salvage value: $1000 Units of Production in Year 1 : 300 units Units of Production in Year 2 : 600 units Units of Production in Year 3 : 800 units Units of activity method: Net Book Value of the asset at the end of year 3 is $_______________
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.
Cost of asset: $14,000
Estimated Useful life: 10 years
Estimated Total Units of activity : 5000 units
Estimated Salvage value: $1000
Units of Production in Year 1 : 300 units
Units of Production in Year 2 : 600 units
Units of Production in Year 3 : 800 units
Units of activity method: Net Book Value of the asset at the end of year 3 is $_______________
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