The straight-line method Question: Cost $134,400 Estimated Residual Value $12,500 Estimated Useful Life (in years) 4 Estimated Useful Life (in working hours) 11,500
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 straight-line method Question:
| Cost $134,400 |
| Estimated Residual Value $12,500 |
| Estimated Useful Life (in years) 4 |
| Estimated Useful Life (in working hours) 11,500 |
I'm doing the straight-line method for a particular question I asked earlier, I'm noticing that the depreciation expense isn't equal to the asset’s
| Year | Depreciation x Amount | Depreciation Rate = |
Depreciation Expense |
Accumulated Depreiciation | Carrying Amount |
| 2023 | $121,900 | 25% |
30,475 |
||
| 2024 | 121,900 | 25% |
30,475 |
||
| 2025 | 121,900 | 25% |
30,475 |
||
| 2026 | 121,900 | 25% |
30,475 |
||
| 2027 | 121,900 | 25% |
30,475 |
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