A xerox machine was purchased 7 years ago costs P50,000. After making 600,000 copies, the salvage value of the machine is P5,000. The machine is going to be replaced now with a new high technology xerox machine costs P65,000. How much new additional capital is needed if the old machine just made 400,000 copies. Use the service output method in computing the depreciation.
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 xerox machine was purchased 7 years ago costs P50,000. After making 600,000 copies, the salvage value of the machine is P5,000. The machine is going to be replaced now with a new high technology xerox machine costs P65,000. How much new additional capital is needed if the old machine just made 400,000 copies. Use the service output method in computing the
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