SSG bought a machine for $40,000 in January 19W8. The machine had an expected useful life of six years and an expected residual value of $10,000. The machine was depreciated on the straight-line basis. In December 20X1, the machine was sold for $15,000. The company has a policy in its internal accounts of combining the depreciation charge with the profit or loss on disposal of assets. The total amount of depreciation and profit/loss charged to the internal income statement over the life of the machine was $ ........................................
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.
SSG bought a machine for $40,000 in January 19W8. The machine had an expected useful life of six years
and an expected residual value of $10,000. The machine was
December 20X1, the machine was sold for $15,000. The company has a policy in its internal accounts of
combining the depreciation charge with the profit or loss on disposal of assets.
The total amount of depreciation and profit/loss charged to the internal income statement over the life of the
machine was $ ........................................
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