Amicable Company purchased a machine at a cost of P635,000 on January 1, 2019. It was estimated that the machine would have a residual value of P35,000. The estimated useful life is 5 years, 60,000 service hours and 150,000 production units. Required: Prepare a depreciation table for the following methods: Straight line Service hours Production method
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.
Amicable Company purchased a machine at a cost of P635,000 on January 1, 2019. It was estimated that the machine would have a residual value of P35,000.
The estimated useful life is 5 years, 60,000 service hours and 150,000 production units.
Required:
Prepare a
- Straight line
- Service hours
- Production method
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