A storage tank acquired at the beginning of the fiscal year at a cost of $90,000 has an estimated residual value of $6,000 and an estimated useful life of 20 years. a. Determine the amount of annual depreciation by the straight-line method. $fill in the blank 1 b. Determine the amount of depreciation for the first and second years computed by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your answers to the nearest dollar. Depreciation Year 1 $fill in the blank 2 Year 2 $fill in the blank 3
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 storage tank acquired at the beginning of the fiscal year at a cost of $90,000 has an estimated residual value of $6,000 and an estimated useful life of 20 years.
a. Determine the amount of annual depreciation by the straight-line method.
$fill in the blank 1
b. Determine the amount of depreciation for the first and second years computed by the double-declining-balance method. Do not round the double-declining balance rate. If required, round your answers to the nearest dollar.
| Depreciation | ||
| Year 1 | $fill in the blank 2 | |
| Year 2 | $fill in the blank 3 |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
