Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $320,000. The estimated useful life was five years and the residual value was $50,000. Assume that the estimated productive life of the machine is 10,000 units. Expected annual production was year 1, 1,700 units; year 2, 1,600 units; year 3, 1,900 units; year 4, 2,400 units; and year 5, 2,400 units. Solar Innovations Corporation uses the units-of-production (activity-based) method of depreciation. Complete the following depreciation table. If necessary, round your interest expense calculations to the nearest whole dollar. Depreciation expense, accumulated depreciated,book value.
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.
Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $320,000. The estimated useful life was five years and the residual value was $50,000. Assume that the estimated productive life of the machine is 10,000 units. Expected annual production was year 1, 1,700 units; year 2, 1,600 units; year 3, 1,900 units; year 4, 2,400 units; and year 5, 2,400 units.
Solar Innovations Corporation uses the
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