Vaughn Manufacturing purchased a depreciable asset for $1190000. The estimated salvage value is $63000, and the estimated useful life is 10000 hours. Vaughn used the asset for 1100 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset? $130900 $1127000 $123970 $112700
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.
Vaughn Manufacturing purchased a
The depreciation is the decrease in value of an asset with the usage each and every year.
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