Memorandum
To:
From:
Subject: Depreciation Value of your Special Purpose Machine
Date:

Congratulations on your purchase of this special purpose machine. With every purchase of a new machinery comes the depreciation value of the machine. In order to report the value of this machine, we first must figure out the total amount paid for your machine. It says here you purchased the machine for an invoice price of $1,200,000 and the freight cost was $6000 and the cost for installation was $64000. We would add all that up and get a total machine cost of $1,270,000. There are 3 types of depreciation methods we can use to figure out the annual depreciation value of your machine: Straight Line Method, Units of productions Method, and Double Declining Method. The Straight Line Method is plain and simple. This will tell us what to report at the end of every year for the depreciation value of your machine. First we would take the cost of the machine minus the salvage value divided by the useful life of the machine. I believe the salvage value would be the use of the machine in that year. For example: the total cost of machine is 1270000-200000/5=214000: 200000 would be the salvage life and 5 would be the useful life of the machine and 214000 would be our depreciation value for the year. So after the first year of use the book value of the machine would be 1270000-214000=1056000. Every year we would subtract 214000 from the previous book value. The Units of Productions Method is a little more complicated. This will tell us the estimate depreciation value of the machine. First we would take the cost of the machine minus estimated salvage value divided by the predicted units of production that your machine would produce and we would get a cost per unit (depreciable). After we get the cost per unit (CPU), we would multiply it by the units produced in the period and we will get the depreciation for the period, also in the last year of the useful life of the machinery...

...DepreciationMethodsDepreciation is the accounting process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset.
Factors Involved in the Depreciation Process
1. What depreciable base is to be used for the asset?
2. What is the asset’s useful life?
3. What method of cost apportionment is best for the asset?...

...Depending on the depreciationmethod that they choice to use, it will reflect the estimate. As noted in the book, “when a company changes the way it depreciates an asset in midstream, the change would be made to reflect a change in, either an estimated future benefit from the asset, the patterns of receiving those benefits, or the company’s knowledge about those benefits” (McGraw-Hill Companies, 2010). When this company changes there previous estimate, they don’t...

...DepreciationEssay
A method of accelerated depreciation, in which double the straight-line depreciation amount is taken the first year and then that same percentage, is applied to the un-depreciated amount in subsequent years is called double-declining-balance-method.
Depreciationmethods that provide a higher depreciation charge in the first year...

...Co. purchased equipment on January 1 last year (Year 1) for $225,000. Management
estimates that the equipment will have a useful life of five years and no salvage value. The depreciation expense
recorded for tax purposes will be $64,000 this year (Year 2). The company uses the straight-line method of
depreciation for reporting purposes. The tax rate is 30%.
14. What is the reported net book value of the equipment on the B/S at the end...

...Differentiating DepreciationMethods
Straight-line method of depreciation is where the depreciation is charged as long as you have an asset. However, an accelerated method of depreciation is where the depreciation that you have charged the amount will decline over a period of time. In straight-line method in order for you to get the depreciation...

...Assignment Form
Use the following form to address the five methods of computing book depreciation for health care organizations:
QUESTION
ANSWER – Do not forget to list references at the bottom of the paper. Write a minimum of 30 words for each area listed.
Straight Line Depreciation:
No salvage
Salvage
The simplest most commonly used depreciationmethod. The straight line depreciation...

...Sum of the Years' Digits Method of Depreciation
Sum of the years' digits method of depreciation is one of the accelerated depreciation techniques which are based on the assumption that assets are generally more productive when they are new and their productivity decreases as they become old. The formula to calculate depreciation under SYD method is:
SYD Depreciation =
Depreciable...

...RICS Valuation Faculty
The Depreciated Replacement Cost Method of Valuation for Financial Reporting
Valuation Information Paper 10
Produced in association with
Valuation Information Paper No. 10 The DRC Method of Valuation for Financial Reporting
Acknowledgements RICS would like to thank Kingston University School of Surveying for their help in preparation of this Paper. Extracts from the ‘International Valuation Standards 2007’ are reproduced in...