Spiderman Company owns a machine that was bought on January 1, 2005 for P3,760,000. The machine was estmated to have a useful life of five years and a residual value of P240,000. Spiderman uses the sum of years' digits method of depreciation. At the beginning of 2008, Spiderman determined that the total useful life of the machine should have been four years and the residual value is P352,000. For the year 2008, Spiderman should record depreciation expense on this amchine at a. 192,000 b. 444,000 c. 592,000 d. 704,000

Spiderman Company owns a machine that was bought on January 1, 2005 for P3,760,000. The machine was estmated to have a useful life of five years and a residual value of P240,000. Spiderman uses the sum of years' digits method of depreciation. At the beginning of 2008, Spiderman determined that the total useful life of the machine should have been four years and the residual value is P352,000. For the year 2008, Spiderman should record depreciation expense on this amchine at a. 192,000 b. 444,000 c. 592,000 d. 704,000

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Description: Spiderman Company owns a machine that was bought on January1, 2005 for P3,760,000. The machine was estmated to have a usefullife of five years and a residual value of P240,000. Spiderman usesthe sum of years' digits method of depreciation. At the be

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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Question

Spiderman Company owns a machine that was bought on January
1, 2005 for P3,760,000. The machine was estmated to have a useful
life of five years and a residual value of P240,000. Spiderman uses
the sum of years' digits method of depreciation. At the beginning
of 2008, Spiderman determined that the total useful life of the
machine should have been four years and the residual value is
P352,000. For the year 2008, Spiderman should record depreciation
expense on this amchine at
a. 192,000
b. 444,000
c. 592,000
d. 704,000

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