Kaabigan Builders purchased a testing machine worth 2500000, it has a shipping fee worth 35000 and another 50000 for the installation. If the annual rate is 10%, use the Declining Balance Method, determine (a) Depreciation cost on the 4th year of use (b) Accumulated depreciation after 5 years (c) Scrap value if its n life is 10 years
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.
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Kaabigan Builders purchased a testing machine worth 2500000, it has a shipping fee worth 35000 and another 50000 for the installation. If the annual rate is 10%, use the Declining Balance Method, determine
(a)
(b)
(c) Scrap value if its n life is 10 years
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