A company purchased machinery that cost $510,000. It has a 8 year estimated useful life. It is estimated that the machine will be operated for 100,000 hours over its useful life and have a salvage value of $10,000. If the machine had been operated for 22,000 hours for year 3 Calculate depreciation expense under 1) straight-line method. 2) unit-of-production method. 3) 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.
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