2. An entity purchased equipment on January 1, 2021 for P5,000,000. The equipment had a useful life of 5 years and residual value of P600,000. The policy is to depreciate 5-year assets using the 200% double declining method for the first 2 years and then switch to straight line. What amount should be reported as accumulated depreciation on December 31, 2023?
2. An entity purchased equipment on January 1, 2021 for P5,000,000. The equipment had a useful life of 5 years and residual value of P600,000. The policy is to depreciate 5-year assets using the 200% double declining method for the first 2 years and then switch to straight line. What amount should be reported as accumulated depreciation on December 31, 2023?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 2E: Depreciation Methods Sorter Company purchased equipment for 200,000 on January 2, 2019. The...
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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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![2. An entity purchased equipment on January 1, 2021 for P5,000,000. The equipment had a useful life of
5 years and residual value of P600,000. The policy is to depreciate 5-year assets using the 200% double
declining method for the first 2 years and then switch to straight line. What amount should be reported as
accumulated depreciation on December 31, 2023?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3f177076-233b-4285-9243-14928f45f77c%2F7b962fb7-6e68-41f0-8154-54e471fdbe3e%2Fy2gva5vh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2. An entity purchased equipment on January 1, 2021 for P5,000,000. The equipment had a useful life of
5 years and residual value of P600,000. The policy is to depreciate 5-year assets using the 200% double
declining method for the first 2 years and then switch to straight line. What amount should be reported as
accumulated depreciation on December 31, 2023?
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