3. An entity takes a full year depreciation in the year of acquisition and no depreciation in the year of disposition. Data relating to a depreciable asset on December 31, 2020 are cost P5,500,000, residual value P1,000,000, accumulated depreciation P3,600,000 and useful life 5 years. The asset was acquired on July 1, 2018. Using the same depreciation method in 2018, 2019 and 2020, what amount of depreciation should be recorded in 2021?

3. An entity takes a full year depreciation in the year of acquisition and no depreciation in the year of disposition. Data relating to a depreciable asset on December 31, 2020 are cost P5,500,000, residual value P1,000,000, accumulated depreciation P3,600,000 and useful life 5 years. The asset was acquired on July 1, 2018. Using the same depreciation method in 2018, 2019 and 2020, what amount of depreciation should be recorded in 2021?

Name: 3. An entity takes a full year depreciation in the year of acquisitio
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Description: 3. An entity takes a full year depreciation in the year of acquisition and no depreciation in the year ofdisposition. Data relating to a depreciable asset on December 31, 2020 are cost P5,500,000, residual valueP1,000,000, accumulated depreciation P

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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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3. An entity takes a full year depreciation in the year of acquisition and no depreciation in the year of
disposition. Data relating to a depreciable asset on December 31, 2020 are cost P5,500,000, residual value
P1,000,000, accumulated depreciation P3,600,000 and useful life 5 years. The asset was acquired on July
1, 2018. Using the same depreciation method in 2018, 2019 and 2020, what amount of depreciation
should be recorded in 2021?

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