The original cost of the properties was P9,000,000 each when they were acquired on January 1, 2015. Both have an estimated useful life of 10 years The entity uses the fair value model to value all its investment properties. Required: Computed the following a. Total amount recognized in the Dec. 31, 2017 statement of profit or loss b. Total amount recognized in the Dec. 31, 2017 Statement of financial position c. Provide adjusting enty on Dec. 31, 2017.
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 original cost of the properties was P9,000,000 each when they were
acquired on January 1, 2015. Both have an estimated useful life of 10 years
The entity uses the fair value model to value all its investment properties.
Required: Computed the following
a. Total amount recognized in the Dec. 31, 2017 statement of
profit or loss
b. Total amount recognized in the Dec. 31, 2017
financial position
c. Provide adjusting enty on Dec. 31, 2017.
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