Depreciation Methods A company wants to buy a new refrigerated truck for $5,000,000. The truck can be used for 4 years, then it has a market value of $360,000. You are asked to calculate the depreciation for each year for each of the four classic depreciation methods: a) straight line b) Declining balance of 150% c) Units of production method (given: use in year 1: 450,000 km, year 2: 410,000 km, year 3: 380,000 km, year 4: 330,000 km) Please solve in Excel and show the formulas.
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.
Please solve in Excel and show the formulas.
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