Machinery is purchased on July 1 of the current fiscal year for $240,000. It is expected to have a useful life of 4 years, or 25,000 operating hours, and a residual value of $15,000. Compute the depreciation for the last 6 months of the current fiscal year ending December 31 by each of the following methods: a. Straight-line $fill in the blank 1 b. Double-declining-balance $fill in the blank 2 c. Units-of-activity (used for 1,600 hours during the current year) $fill in the blank 3
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.
Machinery is purchased on July 1 of the current fiscal year for $240,000. It is expected to have a useful life of 4 years, or 25,000 operating hours, and a residual value of $15,000. Compute the depreciation for the last 6 months of the current fiscal year ending December 31 by each of the following methods:
a. Straight-line
$fill in the blank 1
b. Double-declining-balance
$fill in the blank 2
c. Units-of-activity (used for 1,600 hours during the current year)
$fill in the blank 3
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