Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on October 1 for $54,820. The equipment was expected to have a useful life of three years, or 7,600 operating hours, and a residual value of $1,620. The equipment was used for 1,400 hours during Year 1, 2,700 hours in Year 2, 2,300 hours in Year 3, and 1,200 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. Note: Round all final values for each depreciation method and each year to the nearest whole dollar. a. Straight-line method Year Amount Year 1 Year 2 %24 Year 3 %24 Year 4 b. Units-of-activity method Year Amount Year 1 %24 Year 2 Year 3 Year 4 c. Double-declining-balance method Year Amount Year 1 Year 2 %24 Year 3 %24 Year 4
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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