On July 1, APPLE purchased a machine worth ₱21,000,000 subject to a 2% cash discount if paid within 120 days. Freight on the machinery amounted to ₱315,000. Construction of bases for such machine acquired amounted to ₱4,050,000. On November 15, APPLE paid the supplier of the machine. How much is the total cost of the machine to be reported in the year-end statement of financial position?
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.
1. On July 1, APPLE purchased a machine worth ₱21,000,000 subject to a 2% cash discount if paid within 120 days. Freight on the machinery amounted to ₱315,000. Construction of bases for such machine acquired amounted to ₱4,050,000. On November 15, APPLE paid the supplier of the machine. How much is the total cost of the machine to be reported in the year-end statement of financial position?
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