On January 1, 2019, AMAZING Company purchased a building worth P25,000,000 with estimated useful life of 50 years and estimated residual value of P500,000. The building is used as headquarter for the company. Employees were very excited and positive on this move by management and many promised to do better on their roles On financial reporting side, the company prepares its financial statement every December 31. On December 31, 2020, what is the book value of the building?

On January 1, 2019, AMAZING Company purchased a building worth P25,000,000 with estimated useful life of 50 years and estimated residual value of P500,000. The building is used as headquarter for the company. Employees were very excited and positive on this move by management and many promised to do better on their roles On financial reporting side, the company prepares its financial statement every December 31. On December 31, 2020, what is the book value of the building?

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Description: On January 1, 2019, AMAZING Company purchased a building worth P25,000,000with estimated useful life of 50 years and estimated residual value of P500,000. Thebuilding is used as headquarter for the company. Employees were very excited andpositive on

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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.

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Question

On January 1, 2019, AMAZING Company purchased a building worth P25,000,000
with estimated useful life of 50 years and estimated residual value of P500,000. The
building is used as headquarter for the company. Employees were very excited and
positive on this move by management and many promised to do better on their roles.
On financial reporting side, the company prepares its financial statement every
December 31.
On December 31, 2020, what is the book value of the building?

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