8. A lathe machine costing 53,000 has a scrap value of 5,000 at the end of useful life. This machine has a working hour average life of 50,000 hours and will be run as follows: 1 st year 5,675 hours 2 nd year 7,300 hours 3 rd year 6,600 hours 4 th year 9,775 hours 5 th year 8,260 hours 6 th year 2,785 hours Find the 3rd, 5th and 6th year depreciation charge respectively. (Units of production metho
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.
8. A lathe machine costing 53,000 has a scrap value of 5,000 at the end of useful life. This
machine has a working hour average life of 50,000 hours and will be run as follows:
1
st year 5,675 hours
2
nd year 7,300 hours
3
rd year 6,600 hours
4
th year 9,775 hours
5
th year 8,260 hours
6
th year 2,785 hours
Find the 3rd, 5th and 6th year
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