A telephone company purchased a microwave radio equipment for P6,000,000. Freight and installation charges amounted to 3% of the purchased price. If the equipment shall be depreciated over a period of 8 years with a salvage value of 5%, determine the following: (a) Annual depreciation charge using the straight-line method (b) Depreciation charge during the fifth year using the sum-of-the-years-digits method.

A telephone company purchased a microwave radio equipment for P6,000,000. Freight and installation charges amounted to 3% of the purchased price. If the equipment shall be depreciated over a period of 8 years with a salvage value of 5%, determine the following: (a) Annual depreciation charge using the straight-line method (b) Depreciation charge during the fifth year using the sum-of-the-years-digits method.

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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A telephone company purchased microwave radio equipment for P6,000,000. Freight and installation charges amounted to 3% of the purchased price. If the equipment shall be depreciated over a period of 8 years with a salvage value of 7%, determine the following: a. Annual depreciation using the straight line method b. Depreciation charge during the fifth year using the sum of the years digit method
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