Create a units of production depreciation Cargo Van Price $26,000 Machine Price $48,000 Salvage value $2,000 Salvage value $3,000 Useful life 10 years Useful life 8 years Total miles 90,000 Total hours 13,000 Yr 1 miles 12,100 Yr 1 hours 1,250 Yr 2 miles 9,400 Yr 2 hours 1,46
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.
Create a units of production
Cargo Van Price $26,000 Machine Price $48,000
Salvage value $2,000 Salvage value $3,000
Useful life 10 years Useful life 8 years
Total miles 90,000 Total hours 13,000
Yr 1 miles 12,100 Yr 1 hours 1,250
Yr 2 miles 9,400 Yr 2 hours 1,46
Depreciation is the non-cash outlay reported in the income statement in order to record the reduction in the value of asset due to its regular usage.
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