Keyser Company purchased a machine that has a manufacturer's suggested useful life of 20 years. The company plans to use the machine on a special project that will last 12 years. At the completion of the project, the machine will be sold. a. Over how many years should the machine be depreciated? b. Why? Explain
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.
Keyser Company purchased a machine that has a manufacturer's suggested useful life of 20 years. The company plans to use the machine on a special project that will last 12 years. At the completion of the project, the machine will be sold.
a. Over how many years should the machine be
b. Why? Explain:
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