Page 420 - Accounting Principles (A Business Perspective)

10. Property, plant, and equipment

End of Depreciation
Year Expense Dr.; Total
Accumulated Accumulated
Depreciation Cr. Depreciation Book Value
$54,000
1 $ 5,000 $ 5,000 49,000
2 5,000 10,000 44,000
3 5,000 15,000 39,000
4 5,000 20,000 34,000
5 5,000 25,000 29,000
6 5,000 30,000 24,000
7 5,000 35,000 19,000
8 5,000 40,000 14,000
9 5,000 45,000 9,000
10 5,000 50,000 4,000*
$50,000
* Estimated salvage value.
Exhibit 83: Straight-line depreciation schedule
If the machine produced 1,000 units in 2010 and 2,500 units in 2011, depreciation expense for those years
would be USD 1,000 and USD 2,500, respectively.
Accelerated depreciation methods record higher amounts of depreciation during the early years of an
asset's life and lower amounts in the asset's later years. A business might choose an accelerated depreciation
method for the following reasons:
• The value of the benefits received from the asset decline with age (for example, office buildings).
• The asset is a high-technology asset subject to rapid obsolescence (for example, computers).
• Repairs increase substantially in the asset's later years; under this method, the depreciation and repairs

together remain fairly constant over the asset's life (for example, automobiles).
The most common accelerated method of depreciation is the double-declining-balance (DDB) method.

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