If the current value of a chemical plant is $ 800 thousand, its scrap value is $ 50 thousand, the service life is 8 years, the interest rate is 7%, the depreciation value and book value for each year, By the linear method With the decreasing balances 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.
If the current value of a chemical plant is $ 800 thousand, its scrap value is $ 50 thousand, the service life is 8 years, the interest rate is 7%, the
By the linear method
With the decreasing balances method
By the method of summation of years
Calculate using the accumulated fund method.
Show depreciation and book value changes by years on the chart.
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