Samson Company applies revaluation accounting to plant assets with a carrying value of P800,000, a useful life of 4 years, and no salvage value. Depreciation is calculated on the straight-line basis. At the end of year 1, independent appraisers determine that the asset has a fair value of P750,000. Select one: a. debit to Depreciation Expense for P200,000. b. The journal entry to record depreciation for year one will include a c. debit to Depreciation Expense for P50,000. d. credit to Accumulated Depreciation for P50,000. e. debit to Accumulated Depreciation for P200,000.
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.
Samson Company applies revaluation accounting to plant assets with a carrying value of P800,000, a useful life of 4 years, and no salvage value.
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