An industrial plant bought a generator set for P98,591.00. Other expenses including installation amounted to P12,561.00. The genset has an estimated economic life up to 21 years with a salvage value at the end of its life of P5,000.00. Determine the book value at the 15th year using the declining balance method. Answer in two decimal places
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.
An industrial plant bought a generator set for P98,591.00. Other expenses including installation amounted to P12,561.00. The genset has an estimated economic life up to 21 years with a salvage value at the end of its life of P5,000.00. Determine the book value at the 15th year using the declining balance method.
Answer in two decimal places
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