Faithful Company purchased an equipment on January 2, 2021 for P3,000,000. The equipment had an estimated useful life of 5 years. It is the company's policy to use the double declining method in its first two years and then switch to the straight-line method for the remaining useful life of the asset. How much is the balance of the accumulated depreciation account pertaining to the equipment as of December 31, 2023?

Faithful Company purchased an equipment on January 2, 2021 for P3,000,000. The equipment had an estimated useful life of 5 years. It is the company's policy to use the double declining method in its first two years and then switch to the straight-line method for the remaining useful life of the asset. How much is the balance of the accumulated depreciation account pertaining to the equipment as of December 31, 2023?

Name: Faithful Company purchased an equipment on January 2, 2021 for P3,000
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Description: Faithful Company purchased an equipment on January 2, 2021 for P3,000,000. The equipment hadan estimated useful life of 5 years. It is the company's policy to use the double declining method in itsfirst two years and then switch to the straight-line

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

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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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Faithful Company purchased an equipment on January 2, 2021 for P3,000,000. The equipment had
an estimated useful life of 5 years. It is the company's policy to use the double declining method in its
first two years and then switch to the straight-line method for the remaining useful life of the asset.
How much is the balance of the accumulated depreciation account pertaining to the equipment as of
December 31, 2023?

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