Calculate the amount of depreciation under CCA method for each of the four years as well as the backlog depreciation for a machine from the following information by assuming straight line method of depreciation: Cost of machine OMR 60,000 Estimated life 4 years Residual Value Nil Inflation Rate 10% p.a.
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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