Depreciation by two methods A Kubota tractor acquired on January 8 at a cost of $82,000 has an estimated useful life of 4 years. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
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.
A Kubota tractor acquired on January 8 at a cost of $82,000 has an estimated useful life of 4 years.
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
Assuming that it will have no residual value, determine the depreciation for each of the first two years:
- by the straight-line method. Round your answers to the nearest dollar.
First Year Second Year - by the double-declining-balance method. Round your answers to the nearest dollar.
First Year Second Year
![**Depreciation by Two Methods**
**DATA**
- **Asset**: Kubota tractor
- **Acquisition date**: January 8
- **Cost**: $82,000
- **Useful life (years)**: 4
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Using formulas and cell references, perform the required analysis, and input your answers into the First Year and Second Year columns. Transfer the numeric results for the green entry cells (B12, D12, B14, D14) into the appropriate fields in CNOWv2 for grading.
**Depreciation Methods:**
1. **Straight-line**
- First Year: [Green entry cell]
- Second Year: [Green entry cell]
2. **Double-declining**
- First Year: [Green entry cell]
- Second Year: [Green entry cell]
*Note: The grid indicates entry cells to be filled with computed values based on the respective depreciation formulas.*](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb15f6859-eed8-4643-9af9-05fb0327ab0e%2F49abc26a-345b-45ea-98c9-cab5e5a59902%2F1g9cls_processed.jpeg&w=3840&q=75)
Formula for straight line depriciation:-
Depreciation= (Cost - Salvage value)/Useful life
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