1. A company bought a telecommunication equipment for P280,000. Other expenses including installation amount to P35,000. The equipment is set to have 12 years with the salvage value at the end of life of P23,000. Determine the depreciation charge during the 5th year and the book value at the end of the 8th years by (a) declining balance method (b) straight-line method

1. A company bought a telecommunication equipment for P280,000. Other expenses including installation amount to P35,000. The equipment is set to have 12 years with the salvage value at the end of life of P23,000. Determine the depreciation charge during the 5th year and the book value at the end of the 8th years by (a) declining balance method (b) straight-line method

Name: 1. A company bought a telecommunication equipment for P280,000. Other
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Description: 1. A company bought a telecommunication equipment for P280,000. Other expenses includinginstallation amount to P35,000. The equipment is set to have 12 years with the salvage value at theend of life of P23,000.Determine the depreciation charge durin

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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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Question

1. A company bought a telecommunication equipment for P280,000. Other expenses including
installation amount to P35,000. The equipment is set to have 12 years with the salvage value at the
end of life of P23,000.
Determine the depreciation charge during the 5th year and the book value at the end of the 8th
years by
(a) declining balance method
(b) straight-line method
(c) sinking fund method with i=13%
(d) double declining balance method and
(e) SYD method.

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