Service Output Method Given: FC = 800,000.00 pesos SV = 200,000.00 pesos n = 5 years Output in year 1 = 300 units Total output in 5 yrs = 1000 units a. Depreciation per unit = ? b. Book Value at year 1= ?
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.
Service Output Method
Given:
FC = 800,000.00 pesos
SV = 200,000.00 pesos
n = 5 years
Output in year 1 = 300 units
Total output in 5 yrs = 1000 units
a.
b. Book Value at year 1= ?
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