Happy Company owned a power plant which consisted of the following assets all acquired at the beginning of current year. Residual value Useful life Cost in years Building Machinery Equipment 6,100,000 2,550,000 1,030,000 100,000 50,000 30,000 20 10
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.
Composite rate- 9.30%
Composite life- 10.56 years
The company receives P40,000 upon retirement of the machinery at the end of 5th year, debited to
Question:How much is the total carrying amount of the assets at the end of the 6th year?
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