On January 1, 2017, Rabbit Company purchased a machinery for P600,000. The machinery had been depreciated using the straight line method with residual value of P60,000 and useful life of 20 years. On January 1, 2019, the company determined that the remaining useful life is 10 years and the residual value is P80,000. What is the depreciation for 2019? A. 27,000 B. 46,600 C. 54,600 D. 58,250
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, Rabbit Company purchased a machinery for P600,000. The machinery had been
that the remaining useful life is 10 years and the residual value is P80,000. What is the depreciation for 2019?
A. 27,000 B. 46,600 C. 54,600 D. 58,250
Step by step
Solved in 2 steps
