Soho Inc. bought a professional coffee machine costing $100,000. Over its useful life it is estimated that it can process 5,000 kgs of coffee or 200,000 servings. Entity can salvage the machine $5,000 at the end of useful life. Calculate the depreciation for year 1 if it has processed 200 kgs of coffee and have served 15,000 customers.Use units of production 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.
Soho Inc. bought a professional coffee machine costing $100,000. Over its useful life it is estimated that it can process 5,000 kgs of coffee or 200,000 servings. Entity can salvage the machine $5,000 at the end of useful life. Calculate the
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