ABC purchased a machine on January 1, 20X0, for P18,000 cash. The machine has an estimated useful life of four years and a salvage value of P4,700. ABC uses the double-declining-balance method of depreciation for all its assets. What will be the machine's book value as of December 31, 20X1?
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.
14. ABC purchased a machine on January 1, 20X0, for P18,000 cash. The machine has an estimated useful life of four years and a salvage value of P4,700. ABC uses the double-declining-balance method of
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