A Initial Cost + Installation $25,000 $15,000 Uniform end of year maintenance $2,000 $4,000 Overhaul, end of 3rd year $3,500 Salvage value $3,000 Service Lifetime 4 yrs 6 yrs Calculate the capitalized cost
A Initial Cost + Installation $25,000 $15,000 Uniform end of year maintenance $2,000 $4,000 Overhaul, end of 3rd year $3,500 Salvage value $3,000 Service Lifetime 4 yrs 6 yrs Calculate the capitalized cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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