Use the following data: Asset cost $120,000 Expected life 4 years Estimated salvage value $12,000 Using the sum-of-the-years-digit method, the amount of depreciation for the third year would be Question 12 options: $28,000. $21,600. $30,000. $48,600.
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.
Use the following data:
|
Asset cost |
$120,000 |
|
Expected life |
4 years |
|
Estimated salvage value |
$12,000 |
Using the sum-of-the-years-digit method, the amount of depreciation for the third year would be
Question 12 options:
|
$28,000. |
|
|
$21,600. |
|
|
$30,000. |
|
|
$48,600. |
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