Use the following information for the Quick Studies below. (Algo) Skip to question [The following information applies to the questions displayed below.] Equipment costing $21,600 with a 5-year useful life and an estimated $3,600 salvage value is acquired and started operating on January 1. The equipment is estimated to produce 3,000 units of product during its life. It produced 450 units in the first year.
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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Use the following information for the Quick Studies below. (Algo)
Skip to question
[The following information applies to the questions displayed below.]
Equipment costing $21,600 with a 5-year useful life and an estimated $3,600 salvage value is acquired and started operating on January 1. The equipment is estimated to produce 3,000 units of product during its life. It produced 450 units in the first year.
QS 10-8 (Algo) Recording depreciation journal entries LO P1
Record the journal entries for equipment depreciation for the first year under straight-line, units-of-production, and double-declining-balance.
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