ABC Resto uses the retirement method to account for their cutlery. At the beginning of the year, the count was at 500 pieces. The older 200 pieces were valued at P5.00 each while the newer 300 pieces costed P5.10 each. During the year, it purchased additional 250 pieces at P5.20 each. During the year, it sold 50 pieces for P100. The year-end count resulted to 400 pieces. How much is the depreciation expense for the 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.
ABC Resto uses the retirement method to account for their cutlery. At the beginning of the year, the count was at 500 pieces. The older 200 pieces were valued at P5.00 each while the newer 300 pieces costed P5.10 each. During the year, it purchased additional 250 pieces at P5.20 each. During the year, it sold 50 pieces for P100. The year-end count resulted to 400 pieces. How much is the
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