The company has the following balances on the Unadjusted Trial Balance for the year Dec. 31, 2019: Computer - P240,000 Accumulated Depreciation – Computer - P 40,000 Depreciation Policy: Straight line method with useful life of 5 years, and zero scrap value. Required: a. Prepare adjusting entries for the depreciation expense for 2019. b. Present the net book value of the computer for December 31, 2019.
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.
The company has the following balances on the Unadjusted
Computer - P240,000
Depreciation Policy:
Required:
a. Prepare
b. Present the net book value of the computer for December 31, 2019.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
