Land Bank of the Phil. bought an office equipment for P750,000 on Nov. 25, 2020. The equipment’s estimated useful life is 5 years. Compute for the following: a) the total depreciation expense at the end of the year 2020 b) the Accumulated Depreciation as of Dec 31, 2021 c) carrying amount of the equipment on Dec. 31, 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.
Land Bank of the Phil. bought an office equipment for P750,000 on Nov. 25, 2020. The equipment’s estimated useful life is 5 years. Compute for the following:
a) the total
b) the
c) carrying amount of the equipment on Dec. 31, 2022
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