On October 1, 2021, Marigold Company places a new asset into service. The cost of the asset is $112000 with an estimated 5-year life and $32500 salvage value at the end of its useful life. What is the book value of the plant asset on the December 31, 2021, balance sheet assuming that Marigold Company uses the double-declining-balance method of depreciation? $68300 $79500 $105500 $100800
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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