New packaging equipment costing $ 52320 was installed during November 2024. The equipment tested in December and will be used for packaging starting in January 2025. The equipment has estimated useful life for 4 years and estimated residual value of $ 4360. The company use straight line depriciation. For this event indicate the amount of expense that should be recognised in 2024 income statement
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.
New packaging equipment costing $ 52320 was installed during November 2024. The equipment tested in December and will be used for packaging starting in January 2025. The equipment has estimated useful life for 4 years and estimated residual value of $ 4360. The company use straight line depriciation. For this event indicate the amount of expense that should be recognised in 2024 income statement
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