is to use the 200% double declining balance method for the first two years of the asset’s life and then switch to straight line depreciation. On December 31, 2021, what amount should be reported as accumulated depreciation?
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.
Tarnish Company purchased equipment on January 1, 2019 for P5,000,000. The equipment had an estimated 5-year useful life. The accounting policy for 5-year assets is to use the 200% double declining balance method for the first two years of the asset’s life and then switch to straight line
On December 31, 2021, what amount should be reported as
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