ABC Company finds its records are incomplete concerning a piece of equipment used in its plant. According to the company records, the equipment has an estimated useful life of 10 years and an estimated salvage value of Php24,000. It has recorded Php12,000 in depreciation each year using the straight-line method. If the accumulated depreciation account shows a balance of Php72,000, what is the original cost of the equipment and how many years remain to be depreciated?
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.
ABC Company finds its records are incomplete concerning a piece of equipment used in its plant. According to the company records, the equipment has an estimated useful life of 10 years and an estimated salvage value of Php24,000. It has recorded Php12,000 in
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