Question,7. On 1st April, 2017, Grand Led. Purchased a machinery for $3,00,000 and incurred $21,000 towards freight and insurance, $3,000 towards carriage Inward and $6,000 towards installation charges. It has estimated that the machinery will have a scrap value of $30,000 at the end of the useful life which is four years. What will be the annual depreciation and the value of machinery after four years according to the Straight Line 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.
Question,7. On 1st April, 2017, Grand Led. Purchased a machinery for $3,00,000 and incurred $21,000 towards freight and insurance, $3,000 towards carriage Inward and $6,000 towards installation charges. It has estimated that the machinery will have a scrap value of $30,000 at the end of the useful life which is four years. What will be the annual
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