Juliana, Inc. leased a piece of commercial land to Ken Corp. for ten years starting January 1, 2022. Ken constructed an improvement on said area for P10,000,000 which was ready for use on June 30, 2022. The improvement has a 20-year useful life. Juliana used the spread-out method. How much is Juliana's income for 2022?
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.
Juliana, Inc. leased a piece of commercial land to Ken Corp. for ten years starting January 1, 2022. Ken constructed an improvement on said area for P10,000,000 which was ready for use on June 30, 2022. The improvement has a 20-year useful life. Juliana used the spread-out method.
How much is Juliana's income for 2022?
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