The Fluffy Laundromat purchased new washing machines and dryers for $69,000. Shipping charges were $430 and installation amounted to $500. The machines are expected to last for 4 years and have a residual value of $3000. If Fluffy elects to use the straight-line method of depreciation, prepare a depreciation schedule for these machines. End of Year Annual Depreciation Accumulated Depreciation Book Value 1 $ $ $ 2 $ $ $ 3 $ $ $ 4 $ $ $3000
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.
The Fluffy Laundromat purchased new washing machines and dryers for $69,000. Shipping charges were $430 and installation amounted to $500. The machines are expected to last for 4 years and have a residual value of $3000. If Fluffy elects to use the straight-line method of
|
End of |
Annual |
Accumulated |
Book |
|
1 |
$ |
$ |
$ |
|
2 |
$ |
$ |
$ |
|
3 |
$ |
$ |
$ |
|
4 |
$ |
$ |
$3000 |
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