On January 1, 2024, Morrow incorporated purchased a spooler di d and have a residual value of $4,000. During its eight-year life, the equipment is expected to produce 250,000 units of product. In 2024 and 2025, 42,000 and 76,000 units, respectively, were produced. Required: Compute depreciation for 2024 and 2025 and the book value of the spooler on December 31, 2024 and December 31, 2025, assuming the straight-line method is used. Depreciation Book value 2024 2025
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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