Equipment with a cost of $147,432 has an estimated residual value of $9,489 and an estimated life of 5 years or 12,507 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,328 hours? a. $36,705.39 b. $41.45 c. $5.00 d. $27,588.60
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 with a cost of $147,432 has an estimated residual value of $9,489 and an estimated life of 5 years or 12,507 hours. It is to be
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