Equipment was purchased at the beginning of 2019 for P204,000. At the time of its purchase, the equipment was estimated to have a useful life of six years and a residual value of P24,000. The equipment was depreciated using the straight-line method of depreciation through 2021. At the beginning of 2022, the estimate of useful life was revised to a total life of eight years and the expected residual value was changed to P15,000. The amount to be recorded for depreciation for 2022, reflecting these changes in estimates, is

Equipment was purchased at the beginning of 2019 for P204,000. At the time of its purchase, the equipment was estimated to have a useful life of six years and a residual value of P24,000. The equipment was depreciated using the straight-line method of depreciation through 2021. At the beginning of 2022, the estimate of useful life was revised to a total life of eight years and the expected residual value was changed to P15,000. The amount to be recorded for depreciation for 2022, reflecting these changes in estimates, is

Name: Equipment was purchased at the beginning of 2019 for P204,000. At the
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Description: Equipment was purchased at the beginning of 2019 for P204,000. At the time of its purchase, the equipment wasestimated to have a useful life of six years and a residual value of P24,000. The equipment was depreciated using thestraight-line method of

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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Concept explainers

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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Question

Equipment was purchased at the beginning of 2019 for P204,000. At the time of its purchase, the equipment was
estimated to have a useful life of six years and a residual value of P24,000. The equipment was depreciated using the
straight-line method of depreciation through 2021. At the beginning of 2022, the estimate of useful life was revised to a
total life of eight years and the expected residual value was changed to P15,000. The amount to be recorded for
depreciation for 2022, reflecting these changes in estimates, is
(A) P22,800.
(B) P19,800.
c) P12,375.
D) P23,625.

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