Determine the total depreciation during the year.Determine the depreciation cost chargeable to each batch of 50 cu.m produced.
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 asphalt and aggregate mixing plant having a capacity of 50 cu.m every hour costs P2,500,000. It is estimated to process 800,000 cu.m during its life. During a certain year, it processed 60,000 cu.m. If its scrap value is P100,000, Determine the total
Step by step
Solved in 2 steps
