DCI & Co. purchased machinery on account on July 1, 2019. Details of the machinery are as follows: Cost of asset – P10,000 Salvage value – P2,000 Useful life – 8 years The company uses the straight-line method in depreciating its assets. What is the amount of accumulated depreciation on December 31, 2021
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.
DCI & Co. purchased machinery on account on July 1, 2019. Details of the machinery are as follows:
Cost of asset – P10,000
Salvage value – P2,000
Useful life – 8 years
The company uses the straight-line method in
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