Your company is considering the purchase of a machine at a cost of P1,261,652, with an estimated salvage value of P207,760 and a projected useful life of 16 years. Determine the depreciation on the 5th year using the sum of years digits (SOYD) depreciation method. Write your final answer in two decimal places.
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.
Your company is considering the purchase of a machine at a cost of P1,261,652, with an estimated salvage value of P207,760 and a projected useful life of 16 years.
Determine the
Write your final answer in two decimal places.
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