An asset is purchased at a cost of P110 000 on 1 January 2016. The asset has a useful of 10 years. The company expects to sell assets after 5 years for an estimated P30 000 before taking into consideration the expected costs of disposal of P20 000. The straight-line method of depreciation is to be used for this asset. Calculate the depreciation for the year ended 31 October 2016.

An asset is purchased at a cost of P110 000 on 1 January 2016. The asset has a useful of 10 years. The company expects to sell assets after 5 years for an estimated P30 000 before taking into consideration the expected costs of disposal of P20 000. The straight-line method of depreciation is to be used for this asset. Calculate the depreciation for the year ended 31 October 2016.

Name: An asset is purchased at a cost of P110 000 on 1 January 2016. The as
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Description: An asset is purchased at a cost of P110 000 on 1 January 2016. The asset has a useful of 10 years. Thecompany expects to sell assets after 5 years for an estimated P30 000 before taking into consideration theexpected costs of disposal of P20 000. Th

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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.

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An asset is purchased at a cost of P110 000 on 1 January 2016. The asset has a useful of 10 years. The
company expects to sell assets after 5 years for an estimated P30 000 before taking into consideration the
expected costs of disposal of P20 000. The straight-line method of depreciation is to be used for this asset.
Calculate the depreciation for the year ended 31 October 2016.

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