On October 1, 2021, Draper James paid $850,000 for equipment having an estimated useful life of 5 years with an estimated salvage value of $250,000. Depreciation is taken for the portion of the year the asset is used. Provide the depreciation expense using sum of years digits for 2024. 150,000 113,333 110,000 80,000 155,833

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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.