A new barcode reading device has an installed cost basis of $22,820 and an estimated service life of nine years. It will have a zero salvage value at that time. The 150% declining balance method is used to depreciate this asset. a. What will the depreciation charge be in year nine? b. What is the book value at the end of year eight? c. What is the gain (or loss) on the disposal of the device if it is sold for $3,200 after eight years? a. The depreciation charge in year nine will be $. (Round to the nearest dollar.)
A new barcode reading device has an installed cost basis of $22,820 and an estimated service life of nine years. It will have a zero salvage value at that time. The 150% declining balance method is used to depreciate this asset. a. What will the depreciation charge be in year nine? b. What is the book value at the end of year eight? c. What is the gain (or loss) on the disposal of the device if it is sold for $3,200 after eight years? a. The depreciation charge in year nine will be $. (Round to the nearest dollar.)
Chapter9: Capital Budgeting And Cash Flow Analysis
Section9.A: Depreciation
Problem 1P
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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.
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