At September 1, 2013, the following existed in the records of Lauren Company: Fixed assets P8,600,000 Accumulated depreciation P3,970,000 During the year ended September 30, 2014, fixed assets with a written down value of P370,000 was sold P490,000. The plant had originally cost P800,000. Fixed assets purchased during the year cost P1,800,000. It is the company’s policy to charge a full year’s depreciation in the year of acquisition of an asset and none in the year of sale, using the a rate of 10% on the straight-line basis. What net amount (book value) should appear in Lauren’s statement of financial position at September 30, 2014 for fixed asset
At September 1, 2013, the following existed in the records of Lauren Company: Fixed assets P8,600,000 Accumulated depreciation P3,970,000 During the year ended September 30, 2014, fixed assets with a written down value of P370,000 was sold P490,000. The plant had originally cost P800,000. Fixed assets purchased during the year cost P1,800,000. It is the company’s policy to charge a full year’s depreciation in the year of acquisition of an asset and none in the year of sale, using the a rate of 10% on the straight-line basis. What net amount (book value) should appear in Lauren’s statement of financial position at September 30, 2014 for fixed asset
Chapter1: Financial Statements And Business Decisions
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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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At September 1, 2013, the following existed in the records of Lauren Company:
Fixed assets P8,600,000
During the year ended September 30, 2014, fixed assets with a written down value of P370,000 was sold P490,000. The plant had originally cost P800,000. Fixed assets purchased during the year cost P1,800,000. It is the company’s policy to charge a full year’s depreciation in the year of acquisition of an asset and none in the year of sale, using the a rate of 10% on the straight-line basis.
What net amount (book value) should appear in Lauren’s statement of financial position at September 30, 2014 for fixed asset
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