The GHI Company has the following Fixed Asset. The company prepares statements on a calendar year basis. March 1: Purchased equipment for $7,000 on October 1 of the calendar year. The salvage value is $1,000 and it has a life of 6 years. Determine the depreciation for the current year (which is a partial year) and the following year (which is a full 12 month year) under the following methods: Straight-Line Method Double-Declining Balance 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.
The GHI Company has the following Fixed Asset. The company prepares statements on a calendar year basis.
March 1: Purchased equipment for $7,000 on October 1 of the calendar year. The salvage value is $1,000 and it has a life of 6 years. Determine the
- Straight-Line Method
- Double-Declining Balance Method
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