On January 1, 2019 an entity acquired an equipment with an estimated useful life of 10years and estimated residual value of 50,000. The depreciation applicable to this equipment was 240,000 for 2021 computed under SYD method. What was the acquisition cost of equipment?
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.
On January 1, 2019 an entity acquired an equipment with an estimated useful life of 10years and estimated residual value of 50,000. The
Step by step
Solved in 2 steps with 3 images
