On April 27, 2021, BatoBatoPik purchased for P6,000,000 a warehouse building and the land on which it is located. The following data were available concerning the property: Current Appraised Value Original Cost Land P2,200,000 P1,800,000 Warehouse P3,300,000 P3,000,000 Total P5,500,000 P4,800,000
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.
16.
On April 27, 2021, BatoBatoPik purchased for P6,000,000 a warehouse building and the land on which it is located. The following data were available concerning the property:
|
|
Current Appraised Value |
Original Cost |
|
Land |
P2,200,000 |
P1,800,000 |
|
Warehouse |
P3,300,000 |
P3,000,000 |
|
Total |
P5,500,000 |
P4,800,000 |
At what amount should the warehouse be recorded?
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