An industrial plant bought a generator set for P84,172.00. Other expenses including installation amounted to P14,249.00. The genset has an estimated economic life up to 19 years with a salvage value at the end of its life of P5,000.00. Determine the book value at the 12th year using the declining balance method. Answer in two decimal places

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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.