Mr. Ron acquired machinery for use in his business. After a strong typhoon, the machinery suffered partial damage. The following data are made available: Cost P 500,000 Accumulated depreciation 300,000 Restoration cost 250,000 Estimated remaining life 5 years How much is the new basis of 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.
Mr. Ron acquired machinery for use in his business. After a strong typhoon, the machinery suffered partial damage. The following data are made available: Cost P 500,000
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