On October 1, 2020, CO. A PURCHASED EQUPMENT FOR $210,000. The estimated useful life of the equipment is 5 years and 300,000 units, and the salvage value is estimated to be $10,000. Compute depreciation expense in year 2021 under 1- Straight line method 2- units of production method-assume the company produced 30,000 units in year 2021, 3- Sum of years digits 4- Double declining balance
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 October 1, 2020, CO. A PURCHASED EQUPMENT FOR $210,000. The estimated useful life of the equipment is 5 years and 300,000 units, and the salvage value is estimated to be $10,000.
Compute
- 1-
Straight line method - 2-
units of production method -assume the company produced 30,000 units in year 2021, - 3- Sum of years digits
- 4- Double declining balance
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