Accounting assigment (Depreciation Memo) Assignment

Accounting assigment (Depreciation Memo) - Assignment ExampleTo get the disparagement amount, subtract the scrap value from the cost of the motorcar and then divide it by the useful life of the elevator car (Weil, Schipper, and Francis, 2012).This method is simple to use. Its calculations are easy as the same amount of depreciation applies for for each one year. There is, therefore, no need for recalculating the value again unless there is a revaluation of the addition. It is likewise easy to forecast future income since you already know what your depreciation will be (Weil, Schipper, and Francis, 2012).The method tends to ignore the fact that assets lose value faster during the first years of use. Since the method applies uniform depreciation on the asset throughout its life, it may give a gameyer book value than the veritable value. In later years, the asset may seem to offer much value than it gives. That is if depreciation is to form the basis of the assessment.Under this method, depreciation of an asset depends on the level of activity during that period. A period where the output level is high would record higher depreciation values comparative to years with low production. To get the amount of depreciation, divide the depreciable amount by the total expected units the machine would produce in its lifetime and then multiply the answer by the periods production (Weil, Schipper, and Francis, 2012).The units-of-production method produces the closest estimate of depreciation to actual depreciation. Since it uses activity level as a basis for determination of depreciation, it fairly allocates depreciation to the periods as per the usage of the asset. In so doing, it matches the depreciation expense to revenue enhancement generated by the asset.In periods where there is no activity, there would be no depreciation. That is despite the fact that the asset would still lose value. The method may also not be applicable to assets whose relationship to product ion is not direct and hence will not depend on activity level. Assets such as