Deter Ind. Purchased packaging equipment on Jan 8 for 576000. The Equipment was expected to habe a useful life of three years, or 14400 operating hours, and a residual value of 3600. The equipment was used for 5760 hours during year 1, 4320 hours in year 2 and 4320 hours in year 3 Record the adjusting journal entery for depreciation in year 2 using double declining balance method compute the book value at the end of year 2
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.
Deter Ind. Purchased packaging equipment on Jan 8 for 576000. The Equipment was expected to habe a useful life of three years, or 14400 operating hours, and a residual value of 3600. The equipment was used for 5760 hours during year 1, 4320 hours in year 2 and 4320 hours in year 3
Record the adjusting journal entery for
compute the book value at the end of year 2
Learn your way
Includes step-by-step video
Step by step
Solved in 2 steps with 1 images
