On January 1, 2021, Ding Company acquired an equipment with useful life of 8 years and P390,000 residual value. using the double-declining balance method, the 2022 depreciation expense on this equipment was P1,170,000. What was the book value of this equipment on December 31, 2023? A . 3,412,500 B. 2,730,000 C. 2,242,500 D. 2,632,500
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, 2021, Ding Company acquired an equipment with useful life of 8 years and P390,000 residual
value. using the double-declining balance method, the 2022
P1,170,000. What was the book value of this equipment on December 31, 2023?
A
.
3,412,500 B. 2,730,000 C. 2,242,500 D. 2,632,500
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