On January 1, 2021, Capiz Company purchased factory equipment for P8,000,000. Estimated salvage value was P320,000. Estimated useful life of the equipment is 10 years and will be depreciated using the double declining balance method.

On January 1, 2021, Capiz Company purchased factory equipment for P8,000,000. Estimated salvage value was P320,000. Estimated useful life of the equipment is 10 years and will be depreciated using the double declining balance method.

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

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

What is the depreciation rate of the factory?

A 20%

B 19.20%

C 10%

D 9.60%

What is the amount of depreciation to be recognized in year 2022?

A 768,000

B 1,228,800

C 1,280.000

D 1,536.000

On January 1, 2021, Capiz Company purchased factory equipment for
P8,000,000. Estimated salvage value was P320,000. Estimated useful life of
the equipment is 10 years and will be depreciated using the double declining
balance method.

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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