A machine costs Php 500,000 with a salvage value of Php 50,000. Its useful life is six years. The expected flow of the machine is 38000 hours in six years. In the first year, the machine was used for 4000 hours. In the second year, 6000 hours and 8000 hours on the third year. What is the depreciation at the end of the third year? What is the corresponding book value?
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.
A machine costs Php 500,000 with a salvage value of Php 50,000. Its useful life is six years. The expected flow of the machine is 38000 hours in six years. In the first year, the machine was used for 4000 hours. In the second year, 6000 hours and 8000 hours on the third year. What is the
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
