On January 2, 2017, Union Co. purchased a machine for P264,000 and depreciated it by the straight-line method using an estimated useful life of eigh years with no salvage value. On January 2, 2020, Union determined that the machine had a useful life of six years from the date of acquisition and will have salvage value of P24,000. An accounting change was made in 2020 to reflect the additional data. The accumulated depreciation for this machine should hau a balance at December 31, 2020, of

On January 2, 2017, Union Co. purchased a machine for P264,000 and depreciated it by the straight-line method using an estimated useful life of eigh years with no salvage value. On January 2, 2020, Union determined that the machine had a useful life of six years from the date of acquisition and will have salvage value of P24,000. An accounting change was made in 2020 to reflect the additional data. The accumulated depreciation for this machine should hau a balance at December 31, 2020, of

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Description: On January 2, 2017, Union Co. purchased a machine for P264,000 anddepreciated it by the straight-line method using an estimated useful life of eightyears with no salvage value. On January 2, 2020, Union determined that themachine had a useful life o

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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On January 2, 2017, Union Co. purchased a machine for P264,000 and
depreciated it by the straight-line method using an estimated useful life of eight
years with no salvage value. On January 2, 2020, Union determined that the
machine had a useful life of six years from the date of acquisition and will have a
salvage value of P24,000. An accounting change was made in 2020 to reflect
the additional data. The accumulated depreciation for this machine should have
a balance at December 31, 2020, of
O 146,000
O 154,000
O 176,000
O 160,000

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