Client A acquired a property on 31 December 2012 for P250,000. The asset is expected to be used within 10 years and will be sold at 5% of the acquisition cost afterwards. Prepare the depreciation schedules using the three methods of computing annual depreciation (i.e., straight-line method, sum-of-the-year’s digit method, and double-declining balance method). The depreciation schedules must show the annual depreciation charges and book values.Compare the three methods in terms of the average book value of the asset in its mid-life (fifth year).

Solution Given Cost of asset 250000 Useful life 10 years Residual value (5% of…

Answered: Client A acquired a property on 31…

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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Client A acquired a property on 31 December 2012 for P250,000. The asset is expected to be used within 10 years and will be sold at 5% of the acquisition cost afterwards.

Prepare the depreciation schedules using the three methods of computing annual depreciation (i.e., straight-line method, sum-of-the-year’s digit method, and double-declining balance method). The depreciation schedules must show the annual depreciation charges and book values.
Compare the three methods in terms of the average book value of the asset in its mid-life (fifth year).

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