Company bought a new equipment for P800,000. The equipment has an estimated salvage value of P20,000 and useful life of 12 years. Depreciation is computed using the sum-of-the-years digits method. How much is the amount of depreciation for 2007? a. P60,000 b. P75,000 c. P90,000 d. P20,000 What is the carrying value of this asset in the statement of financial position at December 31,2020? a. 574,800 b. 577,500 c. 597,500 d. 614.800
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.
On April 1, 2007, Wang Manufacturing Company bought a new equipment for
P800,000. The equipment has an estimated salvage value of P20,000 and useful life of 12
years.
How much is the amount of depreciation for 2007?
a. P60,000
b. P75,000
c. P90,000
d. P20,000
What is the carrying value of this asset in the
a. 574,800
b. 577,500
c. 597,500
d. 614.800
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