An company bought a telecommunication equipment for P280,000. Other expenses including installation amount to P40,000. The equipment is set to have a 12 years with the salvage value at the end of life of P30,000. Determine the depreciation charge during the 4th year, depreciaton up to the 7th year and the book value at the end of the 10th years by (a) declining balance method (b) straight-line method (c) SYD method (d) double declining balance method and (e) sinkin
An company bought a telecommunication equipment for P280,000. Other expenses including installation amount to P40,000. The equipment is set to have a 12 years with the salvage value at the end of life of P30,000. Determine the depreciation charge during the 4th year, depreciaton up to the 7th year and the book value at the end of the 10th years by (a) declining balance method (b) straight-line method (c) SYD method (d) double declining balance method and (e) sinkin
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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 company bought a telecommunication equipment for P280,000. Other expenses including installation amount to P40,000. The equipment is set to have a 12 years with the salvage value at the end of life of P30,000. Determine the depreciation charge during the 4th year, depreciaton up to the 7th year and the book value at the end of the 10th years by
(a) declining balance method
(b) straight-line method
(c) SYD method
(d) double declining balance method and
(e) sinking fund method with i=20%.
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