Supreme auto manufactures automobile spare components has bought a machine with value of P5,000,000. Life of the machine was 10 years and it has zero residual value. At the end of the fourth year the machine was revalued upwards by P200,000. The machine was depreciated with straight line method. Find fifth year depreciation amount for the machine if the remaining useful life of the machine was reassessed at 8th year.
Supreme auto manufactures automobile spare components has bought a machine with value of P5,000,000. Life of the machine was 10 years and it has zero residual value. At the end of the fourth year the machine was revalued upwards by P200,000. The machine was depreciated with straight line method. Find fifth year depreciation amount for the machine if the remaining useful life of the machine was reassessed at 8th year.
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 13PA: Colquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value...
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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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