Equipment acquired on October 1, 2022, at a cost of $754,000, has an estimated useful life of 10 years. The residual value is estimated to be $81,720. (a) Calculate the depreciation expense for the first two years using the straight-line method. Depreciation expense $ Year 1 $ 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.
![Equipment acquired on October 1, 2022, at a cost of $754,000, has an estimated useful life of 10 years. The residual value is estimated
to be $81,720.
(a)
Calculate the depreciation expense for the first two years using the straight-line method.
Depreciation expense
LA
Year 1
$
Year 2](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa510aafe-8a4e-4c13-8f6b-f0855cb69a9c%2F3ff9d3ca-3bbd-47f9-b9d0-76d4f767a90b%2Fpu7w2k6_processed.jpeg&w=3840&q=75)
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![Equipment acquired on October 1, 2022, at a cost of $754,000, has an estimated useful life of 10 years. The residual value is estimated
to be $81,720.
(a)
(b)
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Calculate the depreciation expense for the first two years using the straight-line method.
Depreciation expense
Year 1
Depreciation expense
67228
Year 1
$
Year 2
Calculate the depreciation expense for the first two years using the double diminishing-balance method.
67228
Year 2
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