3. Spin Co. acquired a machine on January 1, 2021 for P500,000. The machine was estimated to have a useful life of 4 years and a residual value equal to 10% of the cost. Required: Prepare the depreciation table under each of the following depreciation methods: a. Straight line method b. Sum-of-the-years' digits method c. Double declining balance method
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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