On January 1, 2020, PT C purchased a car from PT D for IDR 300,000,000 which will be used for office operations. The book value of PT D's car as of January 1 was 250,000,000 and it had been depreciated for 2 years. PT C estimates that the remaining useful lives of these assets will be 5 years. Keep a depreciation entry for 2020 if PT C. uses the straight-line method? a. Dr. Depreciation Expense 60,000,000 Cr. Accumulated Depreciation - Cars 60,000,000 b. Dr. Depreciation Expense 40,000,000 Cr. Accumulated Depreciation - Cars 40,000,000 c. Dr. Depreciation Expense 50,000,000 Cr. Accumulated Depreciation - 50,000,000 Cars d. Dr. Depreciation Expense 83,333,333 Cr. Accumulated Depreciation - Mobil 83,333,333
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, 2020, PT C purchased a car from PT D for IDR 300,000,000 which will be used for office operations. The book value of PT D's car as of January 1 was 250,000,000 and it had been depreciated for 2 years. PT C estimates that the remaining useful lives of these assets will be 5 years.
Keep a
a. Dr. Depreciation Expense 60,000,000 Cr.
b. Dr. Depreciation Expense 40,000,000 Cr. Accumulated Depreciation - Cars 40,000,000
c. Dr. Depreciation Expense 50,000,000 Cr. Accumulated Depreciation - 50,000,000 Cars
d. Dr. Depreciation Expense 83,333,333 Cr. Accumulated Depreciation - Mobil 83,333,333
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