The motor vehicle was originally obtained at $120,000 Is $60,608 the accumulated depreciation as at 1 March 2021? Estimated useful lives is 5 years. All the equipment and motor vehicles are acquired on 1 January 2018. The company uses unit of activity method to depreciate equipment and the double-declining balance method to depreciate all motor vehicles. The company expects that the salvage value of the equipment and motor vehicles is 10 % of the purchase cost. Annual depreciation is calculated for each year from 1 January to 31 December, monthly depreciation is equal to (annual depreciation / 12).
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 motor vehicle was originally obtained at $120,000
Is $60,608 the
Estimated useful lives is 5 years.
All the equipment and motor vehicles are acquired on 1 January
2018. The company uses unit of activity method to
and the double-declining balance method to depreciate all motor vehicles.
The company expects that the salvage value of the equipment and motor
vehicles is 10 % of the purchase cost. Annual depreciation is
calculated for each year from 1 January to 31 December, monthly
depreciation is equal to (annual depreciation / 12).
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