Three years ago, you purchased woodworking equipment for your hobby activities and side-line business in cabinetry. The cost was $70,000, no salvage was expected, and the estimated capacity was 10,000 operating hours. Determine the annual depreciation and book value using the unit-of-production method if the usage has been 3,650, 3,150, and 5,150 hours per year. The depreciation in year 1 is $ The book value in year 1 is $ The depreciation in year 2 is $ The book value in year 2 is $ The depreciation in year 3 is $ The book value in year 3 is $
Three years ago, you purchased woodworking equipment for your hobby activities and side-line business in cabinetry. The cost was $70,000, no salvage was expected, and the estimated capacity was 10,000 operating hours. Determine the annual depreciation and book value using the unit-of-production method if the usage has been 3,650, 3,150, and 5,150 hours per year. The depreciation in year 1 is $ The book value in year 1 is $ The depreciation in year 2 is $ The book value in year 2 is $ The depreciation in year 3 is $ The book value in year 3 is $
Chapter1: Financial Statements And Business Decisions
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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.
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Transcribed Image Text:Three years ago, you purchased woodworking equipment for your hobby activities and side-line business in cabinetry.
The cost was $70,000, no salvage was expected, and the estimated capacity was 10,000 operating hours. Determine the
annual depreciation and book value using the unit-of-production method if the usage has been 3,650, 3,150, and 5,150
hours per year.
The depreciation in year 1 is $
The book value in year 1 is $
The depreciation in year 2 is $
The book value in year 2 is $
The depreciation in year 3 is $
The book value in year 3 is $
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