On January 1, Phil’s Burgers purchased a burger making machine at a cost of $400,000. The delivery, installation and set up costs were $25,000. The company expects the machine to be productive for 5 years and have a residual value of $50,000 at the end of its useful life. calculated the depreciation using the double declining method
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, Phil’s Burgers purchased a burger making machine at a cost of $400,000. The delivery, installation and set up costs were $25,000. The company expects the machine to be productive for 5 years and have a residual value of $50,000 at the end of its useful life. calculated the
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