Splish Brothers Inc. purchased a piece of equipment for $74,400. It estimated a 8-year life and a $3,200 salvage value. At the end of year four (before the depreciation adjustment), it estimated the new total life to be 10 years and the new salvage value to be $9,200. Compute the revised depreciation assuming Splish Brothers uses the straight-line method. Revised annual depreciation $
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.
Splish Brothers Inc. purchased a piece of equipment for $74,400. It estimated a 8-year life and a $3,200 salvage value. At the end of year four (before the
Compute the revised depreciation assuming Splish Brothers uses the straight-line method.
| Revised annual depreciation | $ |
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