NUBD Co. purchased a new machine on January 1, 2021 for P350,000. The machine is expected to have a useful life of 8 years and no salvage value. Straight-line depreciation is to be used. The present value of the cash flow generated by the machine was calculated to be P284,920 using a time-adjusted rate of return of 15%. Use 3 decimal places for the PV factors. What was the annual cash flow, net of income taxes, that was used in the calculation of the present value?
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.
NUBD Co. purchased a new machine on January 1, 2021 for P350,000. The machine is expected to have a useful life of 8 years and no salvage value. Straight-line
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