Weird Co. uses straight-line depreciation for its property, plant, and equipment, which, stated at cost, consisted of the following: 12/31/19 12/31/18 Land P 250,000 P 250,000 Buildings 1,950,000 1,950,000 Machinery & equipment 6,950,000 6,500,000 TOTAL 9,150,000 8,700,000 Accumulated depreciation 4,000,000 3,700,000 TOTAL P 5,150,000 P 5,000,000 Weird’s depreciation expense for 2019 and year 2018 was P550,000 and P500,000, respectively. What amount was debited to accumulated depreciation during 2019 because of property, plant, and equipment retirements?
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.
Weird Co. uses straight-line
12/31/19 12/31/18
Land P 250,000 P 250,000
Buildings 1,950,000 1,950,000
Machinery & equipment 6,950,000 6,500,000
TOTAL 9,150,000 8,700,000
TOTAL P 5,150,000 P 5,000,000
Weird’s depreciation expense for 2019 and year 2018 was P550,000 and P500,000, respectively. What amount was debited to accumulated depreciation during 2019 because of property, plant, and equipment retirements?
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