On January 1, 1978, the purchasing engineering of a Cement Co. purchased a new machine at a cost of Php150,000. Depreciation has been computed by the straight-line method based on an estimated useful life of five years and a residual scrap value of Php11,800. On January 1, 1981, extraordinary repairs – which were almost equivalent to a rebuilding of the machinery – were performed at a cost of Php28,400. Because of the thoroughgoing nature of these repairs, the normal life of the machinery was extended materially. The revised estimate of useful life was four years from January 1, 1981. Determine the annual provisions for depreciation for the years 1978 to 1980 and the adjusted provisions for depreciation starting January 1, 1981.
On January 1, 1978, the purchasing engineering of a Cement Co. purchased a new machine at a cost of Php150,000. Depreciation has been computed by the straight-line method based on an estimated useful life of five years and a residual scrap value of Php11,800. On January 1, 1981, extraordinary repairs – which were almost equivalent to a rebuilding of the machinery – were performed at a cost of Php28,400. Because of the thoroughgoing nature of these repairs, the normal life of the machinery was extended materially. The revised estimate of useful life was four years from January 1, 1981. Determine the annual provisions for depreciation for the years 1978 to 1980 and the adjusted provisions for depreciation starting January 1, 1981.
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