On October 1, 2017, PT ABC purchased factory equipment for $800,000. It is estimated that the equipment will have a $80,000 residual value at the end of its 5-year useful life. Instruction: Journalize the depreciation expense of 2019 (Year-3) using double declining balance 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.
FIXED ASSET 2
On October 1, 2017, PT ABC purchased factory
equipment for $800,000. It is estimated that the
equipment will have a $80,000 residual value at
the end of its 5-year useful life.
Instruction:
Journalize the
(Year-3) using double declining balance method.
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