Trigger Ltd. purchased a machinery for $100,000 on Jan 1, 2019. The machine was depreciated at 10% p.a. under the Straight Line Method. On Jan 1, 2022, the company decided to change the method of depreciation from Straight Line Method to Diminishing Balance Method without retrospective
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.
Trigger Ltd. purchased a machinery for $100,000 on Jan 1, 2019. The machine was
On Jan 1, 2022, the company decided to change the method of depreciation from Straight Line Method to Diminishing Balance Method without retrospective effect.
Prepare Machine A/c from 2019 to 2022.
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