The following data relate to a piece of equipment owned by Mr. Queen Company: Acquisition date – July 1, 2020 Cost – P125,000 Estimated residual value – P5,000 Estimated service life – 5 years Estimated service hours – 10,000 Estimated productive outputs in units – 24,000 Under the double-declining balance method, what is the carrying value at December 31, 2022?
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 following data relate to a piece of equipment owned by Mr. Queen Company:
Acquisition date – July 1, 2020
Cost – P125,000
Estimated residual value – P5,000
Estimated service life – 5 years
Estimated service hours – 10,000
Estimated productive outputs in units – 24,000
Under the double-declining balance method, what is the carrying value at December 31, 2022?
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