Answer both A and B questions. A. What are the differences between the Straight-Line Depreciation and Written Down Value Method? (Minimum of three sentences). B. A Manufacturing company in Oman purchased a machine on, 1st of September 2015, at a cost of OMR 50,000, with an estimated salvage value of RO 7,000. It is expected that the asset will be useful for 5 years. Assume that the company use straight line method for calculating depreciation. Calculate the following. 1. What is the depreciation expense for the machine during 2015 and 2016? 2. Calculate the book value of the asset at the end of 2015 and 2016. 3. Prepare a table for the following: Year, Cost, Depreciation, Accumulated Depreciation and Book Value
Answer both A and B questions. A. What are the differences between the Straight-Line Depreciation and Written Down Value Method? (Minimum of three sentences). B. A Manufacturing company in Oman purchased a machine on, 1st of September 2015, at a cost of OMR 50,000, with an estimated salvage value of RO 7,000. It is expected that the asset will be useful for 5 years. Assume that the company use straight line method for calculating depreciation. Calculate the following. 1. What is the depreciation expense for the machine during 2015 and 2016? 2. Calculate the book value of the asset at the end of 2015 and 2016. 3. Prepare a table for the following: Year, Cost, Depreciation, Accumulated Depreciation and Book Value
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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2. Answer both A and B questions.
A. What are the differences between the Straight-Line Depreciation and Written Down Value Method? (Minimum of three sentences).
B. A Manufacturing company in Oman purchased a machine on, 1st of September 2015, at a cost of OMR 50,000, with an estimated salvage value of RO 7,000. It is expected that the asset will be useful for 5 years. Assume that the company use straight line method for calculating depreciation.
Calculate the following.
1. What is the depreciation expense for the machine during 2015 and 2016?
2. Calculate the book value of the asset at the end of 2015 and 2016.
3. Prepare a table for the following:
Year, Cost, Depreciation, Accumulated Depreciation and Book Value.
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