You invested on a special pizza oven for $60,000 which has a useful operating life of 50,000 hours. The salvage value of this commercial oven is $8,000. What is the depreciation value of this special pizza oven for the first year if it was only used 5,000 hours in its first year? a) None of the answers are correct b) Between $3,600 and $3,800 c) Between $6,400 and $6,60O
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.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
