How much are the depreciation expenses for the year 2019? Chicago Company leased a new machine from Bulls Co. On January 1, 2019, Chicago Company providedthe following information pertaining to the lease:Annual rental payable at beginning of each lease year, starting Jan. 1, 2019P400,000Lease term10 yearsUseful life of machine12 yearsImplicit interest ratePresent value of an annuity of 1 in advance for 10 periods at 14%Present value of an ordinary annuity of 1 for 10 periods14%5.955.22Present value of 1 for 10 periods at 14%0.27Guaranteed residual value100,000

The depreciation expense is calculated on right to use of assets. The Right to use of assets…

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How much are the depreciation expenses for the year 2019

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Question

How much are the depreciation expenses for the year 2019?

Chicago Company leased a new machine from Bulls Co. On January 1, 2019, Chicago Company provided
the following information pertaining to the lease:
Annual rental payable at beginning of each lease year, starting Jan. 1, 2019
P400,000
Lease term
10 years
Useful life of machine
12 years
Implicit interest rate
Present value of an annuity of 1 in advance for 10 periods at 14%
Present value of an ordinary annuity of 1 for 10 periods
14%
5.95
5.22
Present value of 1 for 10 periods at 14%
0.27
Guaranteed residual value
100,000

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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