The useful life of a milling machine costing Php 500,000 and a scrap value of Php 10,000 is estimated to be 104,000 units of product and the number of units produced each year is estimated as follows: 1st year: 25,500 units 2nd year: 23,000 units 3rd year: 19,800 units 4th year: 18,800 units 5th year: 16,900 units Use the product unit method to find the depreciation charge for each year. Construct a depreciation schedule.
The useful life of a milling machine costing Php 500,000 and a scrap value of Php 10,000 is estimated to be 104,000 units of product and the number of units produced each year is estimated as follows: 1st year: 25,500 units 2nd year: 23,000 units 3rd year: 19,800 units 4th year: 18,800 units 5th year: 16,900 units Use the product unit method to find the depreciation charge for each year. Construct a depreciation schedule.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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The useful life of a milling machine costing Php 500,000 and a scrap value of Php 10,000 is estimated to be 104,000 units of product and the number of units produced each year is estimated as follows:
1st year: 25,500 units
2nd year: 23,000 units
3rd year: 19,800 units
4th year: 18,800 units
5th year: 16,900 units
Use the product unit method to find the depreciation charge for each year. Construct a depreciation schedule.
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