Home Appliances purchased machinery on April 30, 2014 for $88,000. The useful life of this machinery is estimated at 8 years, with an $8,000 residual value. Company uses the 200%-declining-balance method and the half-year convention. Depreciation expense in 2014 will be:
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.
Home Appliances purchased machinery on April 30, 2014 for $88,000. The useful life of this machinery is estimated at 8 years, with an $8,000 residual value. Company uses the 200%-declining-balance method and the half-year convention.
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