Momhil Inc. bought a professional coffee machine costing ₴100,000.00.Over its useful life it is estimated that it can process 5,000kgs of coffee or 200,000 servings. Entity can salvage the machine ₴5,000 at the end of useful life. Calculate the depreciation for this year if the entity is using unit of production method and it has: a) process 200 kg of coffee, b) served 15,000 customers.
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.
2. Momhil Inc. bought a professional coffee machine costing ₴100,000.00.Over its useful life it is estimated that it can process 5,000kgs of coffee or 200,000 servings. Entity can salvage the machine ₴5,000 at the end of useful life. Calculate the
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