2. Please explain the Units-of-Output depreciation method and give an example of when it might be used. 3. Suppose that a machine had a units-of-production depreciation rate of $2 per operating hour and that the machine was used 20,000 hours the first year. Please calculate the depreciation for the first year and show what the journal entry would be. 4. Can we assume that the first year's depreciation expense (calculated in question 2 above) will also be the depreciation expense for subsequent years? Why or why not?
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.
2. Please explain the Units-of-Output
3. Suppose that a machine had a units-of-production depreciation rate of $2 per operating hour and that the machine was used 20,000 hours the first year. Please calculate the depreciation for the first year and show what the
4. Can we assume that the first year's depreciation expense (calculated in question 2 above) will also be the depreciation expense for subsequent years? Why or why not?
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