2. According to PAS 16, items of PPE are initially measured at 1. PAS 16 defines depreciation as "the decrease in the value of an cost and subsequently measured. using either the cost model PROBLEM 1: TRUE OR FALSE asset." or the fair value model. 3. An entity acquires an asset for P120K. The asset is estimated to have a useful life of 10 years and a residual value of P20K, The straight line depreciation rate based on depreciable amount is 10%. n00ot for B1M A Đ20NK rooi due

2. According to PAS 16, items of PPE are initially measured at 1. PAS 16 defines depreciation as "the decrease in the value of an cost and subsequently measured. using either the cost model PROBLEM 1: TRUE OR FALSE asset." or the fair value model. 3. An entity acquires an asset for P120K. The asset is estimated to have a useful life of 10 years and a residual value of P20K, The straight line depreciation rate based on depreciable amount is 10%. n00ot for B1M A Đ20NK rooi due

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Description: cost and subsequently measured, using either the cost model7. The resulting revaluation surplus, gross of tax, is P80K.9. The P80K revaluation gain is recognized in profit or loss.1. PAS 16 defines depreciation as “the decrease in the value of arAn

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.

Topic Video

Question

cost and subsequently measured, using either the cost model
7. The resulting revaluation surplus, gross of tax, is P80K.
9. The P80K revaluation gain is recognized in profit or loss.
1. PAS 16 defines depreciation as “the decrease in the value of ar
An item of PPE with a carrying amount of P120K is revalued to its
8. All the other items within the class of PPE to which the
Disposal costs of P10K were incurred. The loss on the disposal
10. A PPE with a carrying amount of P200K is sold for P180K.
2. According to PAS 16, items of PPE are initially measured at
PROBLEM 1: TRUE OR FALSE
i PAS 16 defines depreciation as "the decrease in the value
2. According to PAS 16, items of PPE are initially measured
cost and subsequently measured, using either the cost modal
asset."
or the fair value model.
3. An entity acquires an asset for P120K. The asset is estimated to
have a useful life of 10 years and a residual value of P20K. The
straight line depreciation rate based on depreciable amount is
10%.
4. An entity acquires an asset for P1M. A P200K residual value is
estimated for the asset. At the end of the asset's useful life, the
accumulated depreciation will be equal to P1M.
5. A machine acquired on the 20th of July (and ready for its
intended use as at this date) would most likely be depreciated
starting on the 1st of August.
6. A change in the depreciation method, useful life or residual
value of a PPE is accounted for retrospectively.
Fact pattern for the next three items:
An item of PPE with a carrying amount of P120K is revalued to
fair value of P200K.
7. The resulting revaluation surplus, gross of tax, is P80K
revalued item belongs shall also be revalued.
9. The P80K revaluation gain is recognized in profit
Or loss.
is P20K.

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