Depreciation A machine costing $429,000 has an estimated residual value of $15,000 and an estimated service life of 12 years. What is the annual depreciation for each of the first two years under the following methods? Assume the company record a full year of depreciation in the year of purchase. Round all answers to the nearest dollar. Double declining-balance Units of production. Lifetime production is estimated at 500,000 units. The machine produced 39,000 units in year one and 58,000 in year two. Straight-line depreciation method.
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 machine costing $429,000 has an estimated residual value of $15,000 and an estimated service life of 12 years. What is the annual depreciation for each of the first two years under the following methods? Assume the company record a full year of depreciation in the year of purchase. Round all answers to the nearest dollar.
- Double declining-balance
- Units of production. Lifetime production is estimated at 500,000 units. The machine produced 39,000 units in year one and 58,000 in year two.
Straight-line depreciation method.
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