On January 1, 2017, Mogul Company acquired equipment to be used in its servicing operations. The equipment is depreciated 10% per annum and an estimated residual value of P50,000. The depreciation expense applicable to this equipment was P65,000 for 2019 computed under straight line method. What was the acquisition cost of the equipment? P600,000 P700,000 P1,700,000 P650,000
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.
On January 1, 2017, Mogul Company acquired equipment to be used in its servicing operations. The equipment is
P600,000
P700,000
P1,700,000
P650,000
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