24 In the past, Princess company has depreciated its computer hardware using the straight line method. The computer hardware has a 10% salvage value and an estimated useful life of 5 years. As a result of the rapid advancement in information technology, management of Princess has determined that it receives most of the benefits from its computer facilities in the first few years of ownership. Hence, as of January 1, 2019, Princess proposes changing to the sum of years’ digit method for depreciating its computer hardware. The following computer purchases were made by Princess at the beginning of each year. 2016 P108,000 2017 60,000 2018 72,000 What is the amount of depreciation expense that should be recognized in 2019? PLS provide solution and explanation for the answer abov
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.
#24
In the past, Princess company has
has a 10% salvage value and an estimated useful life of 5 years. As a result of the rapid advancement in information technology,
management of Princess has determined that it receives most of the benefits from its computer facilities in the first few years
of ownership. Hence, as of January 1, 2019, Princess proposes changing to the sum of years’ digit method for depreciating its
computer hardware. The following computer purchases were made by Princess at the beginning of each year.
2016 P108,000
2017 60,000
2018 72,000
What is the amount of depreciation expense that should be recognized in 2019?
PLS provide solution and explanation for the answer above
Philippines Accounting standard
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