) Depreciation of Assets. a) On January 1, 2020, a plastic injection machine was acquired for $30,000. Its estimated useful life is 6 years and its salvage value is $1,500. Determine the annual depreciation using the “straight line” method. b) Using the information from the previous section, calculate the depreciation for the first 3 years using the "sum of years" method.}
) Depreciation of Assets. a) On January 1, 2020, a plastic injection machine was acquired for $30,000. Its estimated useful life is 6 years and its salvage value is $1,500. Determine the annual depreciation using the “straight line” method. b) Using the information from the previous section, calculate the depreciation for the first 3 years using the "sum of years" method.}
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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4) Depreciation of Assets.
a) On January 1, 2020, a plastic injection machine was acquired for $30,000. Its estimated useful life is 6 years and its salvage value is $1,500. Determine the annual depreciation using the “straight line” method.
b) Using the information from the previous section, calculate the depreciation for the first 3 years using the "sum of years" method.}
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