A machine was purchased at an original cost of P3,250,114 with a salvage value of P386.985. The machine is expected to perform for 365,281 hours and can produce total units of 574,125. The machine has the following outputs: First year: H-20.243 hours O-45,754 units Second year: H-19,854 hours 0-41,658 units Third year: H-19.895 hours 0-42.036 units Fourth year H-17.856 hours O-36.025 units Determine the following: A)Book value at the end of four years using Service-Output Method. B.)Total depreciation at the end of 2nd year using Working-Hours Method. C.)Book value at the end of three years using Working-Hours Method. (Please provide detailed solution not in excel, thank you)
A machine was purchased at an original cost of P3,250,114 with a salvage value of P386.985. The machine is expected to perform for 365,281 hours and can produce total units of 574,125. The machine has the following outputs: First year: H-20.243 hours O-45,754 units Second year: H-19,854 hours 0-41,658 units Third year: H-19.895 hours 0-42.036 units Fourth year H-17.856 hours O-36.025 units Determine the following: A)Book value at the end of four years using Service-Output Method. B.)Total depreciation at the end of 2nd year using Working-Hours Method. C.)Book value at the end of three years using Working-Hours Method. (Please provide detailed solution not in excel, thank you)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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A machine was purchased at an original cost of P3,250,114 with a salvage value of P386.985. The machine is expected to perform for 365,281 hours and can produce total units of 574,125. The machine has the following outputs:
First year:
H-20.243 hours
O-45,754 units
Second year:
H-19,854 hours
0-41,658 units
Third year:
H-19.895 hours
0-42.036 units
Fourth year
H-17.856 hours
O-36.025 units
Determine the following:
A)Book value at the end of four years using Service-Output Method.
B.)Total depreciation at the end of 2nd year using Working-Hours Method.
C.)Book value at the end of three years using Working-Hours Method.
(Please provide detailed solution not in excel, thank you)
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