Determine the amount of depreciation expense for years ended December 31, 2017,2018,2019 and 2020, by a. the straight-lined method. b. the units-of-production method. c. the declining-balance method, using twice the straight-line rate.
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.
Caribou Company purchased tool sharpening equipment on January 1, 2015, for $194,400. The equipment was expected to have a useful life of 4 years or 22,950 operating hours, and a salvage value of $10,800. The equipment was used for 4,650 hours during 2020, 7,500 in 2019, 7,350 hours in 2018, and 3,450 hours in 2017.
Determine the amount of
a. the
b. the units-of-production method.
c. the declining-balance method, using twice the straight-line rate.
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