Liquior Company has an equipment costing P700,000 with an estimated residual value of P70,000 and an estimated useful life of six years. After using and depreciating the asset for the past two years, the company upgraded the machine parts and the cost of upgrading amounted to P120,000. Assuming that the upgrading costs extended the asset’s economic useful life by an additional two years, what is the revised depreciation expense for the third year using the (1) straight-line method and (2) sum-of-the-years’ digits method?
Liquior Company has an equipment costing P700,000 with an estimated residual value of P70,000 and an estimated useful life of six years. After using and depreciating the asset for the past two years, the company upgraded the machine parts and the cost of upgrading amounted to P120,000. Assuming that the upgrading costs extended the asset’s economic useful life by an additional two years, what is the revised depreciation expense for the third year using the (1) straight-line method and (2) sum-of-the-years’ digits method?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Liquior Company has an equipment costing P700,000 with an estimated residual value of P70,000 and an estimated useful life of six years. After using and
Assuming that the upgrading costs extended the asset’s economic useful life by an additional two years, what is the revised depreciation expense for the third year using the
(1) straight-line method and
(2) sum-of-the-years’ digits method?
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