2. A company bought an electrical equipment worth Php 235,000 with useful life of 10 years. What are the book values of the asset at the end of year if the equipment has a salvage value of Php 15,000 using: a. Straight Line Method b. Sinking Fund Method at 12% interest rate c. Declining Balance Method d. Double Declining Balance Method Sum-of-the-Year's-Digit Method e.
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.
Please answer Double declining balanced method and Sum of the Year's Digit Method
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