Machine equipment has an initial purchase price of 20 000 TL, an estimated scrap value of 2 000 TL, and a 5-year economic life. a) Line-of-Line Method, b) Total Annual Figures Method, c) Declining Balance Method Calculate the annual depreciation and residual values of the machinery equipment according to the above methods?
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.
Machine equipment has an initial purchase price of 20 000 TL, an estimated scrap value of 2 000 TL, and a 5-year economic life.
a) Line-of-Line Method,
b) Total Annual Figures Method,
c) Declining Balance Method
Calculate the annual
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