Odell purchased a used van for use in its business on January 1, 2020. It paid $14,000 for the van. Odell expects the van to have a useful life of four years, with an estimated residual value of $1,100. Odell expects to drive the van 18,000 miles during 2020, 16,000 miles during 2021, 9,000 miles in 2022, and 8,600 miles in 2023, for total expected miles of 51,600. Read the requirements. (Complete all input fields. Enter a 0 for any zero values.) Year Start 2020 2021 2022 2023 Straight-line method Annual Depreciation Expense Accumulated Depreciation Book Value
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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