On January 5, 2021, Lighter Company acquired a building. The building had an estimated useful life of 10- years and an estimated salvage value of P50,000. The depreciation applicable to this building was P240,000 for 2023 computed under the sum-of-the year’s digit method. How much is the carrying value of the building as of December 31, 2022?
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 5, 2021, Lighter Company acquired a building. The building had an estimated useful life of 10- years and an estimated salvage value of P50,000. The
How much is the carrying value of the building as of December 31, 2022?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
