[The following information applies to the questions displayed below.] Tory Enterprises pays $248,400 for equipment that will last five years and have a $44,600 salvage value. By using the equipment in its operations for five years, the company expects to earn $89,500 annually, after deducting all expenses except depreciation. Calculate annual depreciation expense using double-declining-balance method. Prepare a table showing income before depreciation, depreciation expense, and net (pretax) income for each year and for the total five-year period, assuming double-declining-balance depreciation is used. Complete this question by entering your answers in the tabs below. Depreciation Income Schedule Computation Calculate annual depreciation expenses using double-declining-balance method. Note: Round Annual Depreciation to the nearest whole dollar. Year Year 1 Year 2 Year 3. Year 4 Year 5 Total Depreciation for the Period Beginning of Period Book Value $ 248,400 149,040 Depreciation Annual Rate Depreciation 40% $ 99,360 40% 59,616 $ 158,976 Depreciation Schedule End of Period Accumulated Depreciation Book Value $ 149,040 89,424 Income Computation > < Prev 7 of 13 Next >
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.
Depreciation meaning:- Because of the usage, deterioration, or obsolescence, an asset's monetary value falls with time. Depreciation is basically used to measure this decline. Depreciation is the gradual lowering of a fixed asset's recorded cost over the time, until the asset's value is insignificant, according to accounting terminology.
Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc.
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