Mondale Winery depreciates its equipment using the group method. The cost of equipment purchased in 2013 totaled $465,000. The estimated residual value of the equipment was $44,000 and the group depreciation rate was determined to be 12%. What is the annual depreciation for the group?
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.
Mondale Winery depreciates its equipment using the group method. The cost of equipment purchased in 2013 totaled $465,000. The estimated residual value of the equipment was $44,000 and the group
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