A radio service panel truck initially cost P560,000. Its resale value at the end of the 5th year of the useful life is estimated at P150,000. By means of declining balance method, determine the depreciation charge for the second year.
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.
A radio service panel truck initially cost P560,000. Its resale value at the end of the 5th year of the useful life is estimated at P150,000. By means of declining balance method, determine the
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