exact photo service purchased a new color printer at the beginning of year 1 for $36,790. The printer is expected to have a four year useful life and a $3,600 salvage value. The expected print production is estimated at $1,773,200 pages. Actual print production for the four years was as follows: year one: 548,800 year two: 475,400 year three: 385,000 year four: 386,000 total: 1,795,200 The printer was sold at the end of year 4 for $3,850. Compute the depreciation expense for each of the four years, using double declining balance depreciation.
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.
exact photo service purchased a new color printer at the beginning of year 1 for $36,790. The printer is expected to have a four year useful life and a $3,600 salvage value. The expected print production is estimated at $1,773,200 pages. Actual print production for the four years was as follows:
year one: 548,800
year two: 475,400
year three: 385,000
year four: 386,000
total: 1,795,200
The printer was sold at the end of year 4 for $3,850.
Compute the
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