Oman Cables Co. Purchased a machine for OR45,000 on January 1, 2020 The machine is expected to have a four - year life with a residual value of OR5,000 at the end of four years. Using the sum - of - the - years' - digits method, depreciation for 2020 would be: Select one: a. 18,000 b. None of the above is correct c .16,000
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.
Oman Cables Co. Purchased a machine for OR45,000 on January 1, 2020 The machine is expected to have a four - year life with a residual value of OR5,000 at the end of four years. Using the sum - of - the - years' - digits method,
a. 18,000
b. None of the above is correct
c .16,000
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