The cost of equipment is P500,000 and the cost of installation is P30,000. If the salvage value is 10% of the cost of equipment at the end of 5 years, determine the depreciation charge and book value at the end of the third year using (a) straight line method, (b) declining balance method, and (c) sum of the years digit method.

Q: A machine costs P 8,000 which last for 7 years with a salvage value at the end of its life of P 355.…

A: Depreciation is the decrease in the value of the asset due to wear and tear over the useful life of…

Q: An engineer bought an equipment for P500,000. Other expenses including installations amounted to…

A: Depreciation Expense = Cost - Salvage ValueUseful Life

Q: An asset is purchased for $500,000. Salvage in 25 years is $100,000. What are the depreciation in…

A: Calculate the depreciation as per single line method as follows: Formulas:

Q: piece of equipment is purchased for $40,000 and has an estimated salvage value of $1,000 at the end…

A: In accounting we use depreciation to allocate the cost of an asset over its useful life.…

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.