Spiderman Company purchased a machine on January 1, 2017 for P3,760,000. The machine was estimated to have a useful life of five years and a residual value of P240,000. The entity used the sum of years' digits method of depreciation. On January 1, 2020, the entity determined that the total . 'useful life of the machine should have been four years and the residual value is P352,000. What amount should be recorded as depreciation for 2020? а. 192,000 b. 444,000 с. 592,000 d. 704,000
Spiderman Company purchased a machine on January 1, 2017 for P3,760,000. The machine was estimated to have a useful life of five years and a residual value of P240,000. The entity used the sum of years' digits method of depreciation. On January 1, 2020, the entity determined that the total . 'useful life of the machine should have been four years and the residual value is P352,000. What amount should be recorded as depreciation for 2020? а. 192,000 b. 444,000 с. 592,000 d. 704,000
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles
Section: Chapter Questions
Problem 8.5E: Change in Estimate Assume that Bloomer Company purchased a new machine on January 1, 2016, for...
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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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