The price of a corporate railroad car purchased by Prost Corporation was $109,406. It cost $1,422 for delivery and $4,376 for installation. The salvage value at the end of a 7-year life is $21,880. Prepare a depreciation schedule using the sum-of-the-years' digits method, then enter the annual depreciation for year 6 as your answer. $
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 price of a corporate railroad car purchased by Prost Corporation was $109,406. It cost $1,422 for delivery and $4,376 for installation. The salvage value at the end of a 7-year life is $21,880. Prepare a
$
Depreciation means decline in the estimation of benefit inside its valuable life because of mileage of asset or the asset ends up outdated. Depreciation doesn't include money exchange rather it demonstrates how much the benefit worth has been utilized over a period.
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