Depreciation by Two Methods A Kubota tractor acquired on January 8 at a cost of $36,000 has an estimated useful life of 10 years. Assuming that it will have no residual value. a. Determine the depreciation for each of the first two years by the straight-line method. First Year Second Year b. Determine the depreciation for each of the first two years by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your final answers to the nearest dollar. First Year Second 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.
A Kubota tractor acquired on January 8 at a cost of $36,000 has an estimated useful life of 10 years. Assuming that it will have no residual value.
a. Determine the depreciation for each of the first two years by the straight-line method.
| First Year | Second Year |
b. Determine the depreciation for each of the first two years by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your final answers to the nearest dollar.
| First Year | Second Year |
Depreciation means the loss in value of assets because of usage of assets , passage of time or change in technology.
Depreciation can not be charged in books of account until the fixed asset is ready to use.
Straight line method means where same amount of depreciation is charged every year.
Under declining balance method using twice the straight line rate , we need to calculate the percentage of depreciation to be charged.
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