Jefferson Company purchased a piece of equipment on January 1, 2014. The equipment cost HK$600,000 and has an estimated life of 8 years and a residual value of HK$80,000. What was the depreciation expense for the asset for 2015 under the double declining-balance method? What was the depreciation expense for the asset for 2015 under the straight-line method? Prepare journal entries
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.
- Jefferson Company purchased a piece of equipment on January 1, 2014. The equipment cost HK$600,000 and has an estimated life of 8 years and a residual value of HK$80,000.
What was the
What was the depreciation expense for the asset for 2015 under the straight-line method?
Prepare
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