Consider the following information: Asset Cost $56,000 Salvage value 1,000 Life 10 years Depreciation method Straight Line a. What is the depreciation in year 3? b. What would the depreciation in year 4 be if at the beginning of the year we think that the total asset life will be only 8 years instead of 10 years?
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.
7) Consider the following information:
Asset Cost $56,000
Salvage value 1,000
Life 10 years
a. What is the depreciation in year 3?
b. What would the depreciation in year 4 be if at the beginning of the year we think that the total asset life will be only 8 years instead of 10 years?
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