A building maintenance bought a pump set for 90,000. Installation cost amounted to P10,000. The pump set is to have a salvage value of P5,000 at the end of its 17 years life. Determine the depreciation charge during the 13th year and the book value at the end of 13 years by the (a) declining balance method, (b) double declinino balance method (c) sinking fund

A building maintenance bought a pump set for 90,000. Installation cost amounted to P10,000. The pump set is to have a salvage value of P5,000 at the end of its 17 years life. Determine the depreciation charge during the 13th year and the book value at the end of 13 years by the (a) declining balance method, (b) double declinino balance method (c) sinking fund

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Description: A building maintenance bought a pump set for90,000. Installation cost amounted to P10,000.The pump set is to have a salvage value ofP5,000 at the end of its 17 years life. Determinethe depreciation charge during the 13th yearand the book value at th

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.

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Question

A building maintenance bought a pump set for
90,000. Installation cost amounted to P10,000.
The pump set is to have a salvage value of
P5,000 at the end of its 17 years life. Determine
the depreciation charge during the 13th year
and the book value at the end of 13 years by
the (a) declining balance method, (b) double
declining balance method, (c) sinking fund
method at 12% and (d) SYD method.

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