Depreciation Methods On January 2 Skyler, Inc. purchased a laser cutting machine to be used in the fabrication of a part for one of its key products. The machine cost $120,000, and its estimated useful life was four years or 920.000 cuttings after which it could be sold for $5.000. Required a. Calculate each year's depreciation expense for the machine's useful life under each of the following depreciation methods (round all answers to the nearest dollar 1. Straight-line. 2. Double-declining balance 3. Units-of-production. (Assume annual production in cuttings of 200,000; 350,000 260,000 and 110,000) 1. Straight-Line Depreciation Expense 28.750 28.750 Year Year 1 1 Year 2 Year 3 Year 4 28,750 28.750 2. Double-declining balance

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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.