machine has been purchased at 3,00,000 with estimated salvage value of 30,000 at the end of its service life of 12 years. Find out depreciation amount and book value of the machine for various years with the help of straight line method of depreciation.
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 has been purchased at 3,00,000 with estimated salvage value of
30,000 at the end of its service life of 12 years. Find out
value of the machine for various years with the help of
depreciation.
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