Zebra Company has determined the 2021 net income to be P 5,000,000. Revenue received in advance in 2021 of P 250,000 was credited to a revenue account when received. Of the total, P 50,000 was earned in 2021, P 120,000 will be earned in 2022 and the remainder will be earned in 2023. Loss on sale of equipment of P 150,000 in 2021 was erroneously debited to retained earnings. What is the adjusted net income for 2021? a. 4,930,000 b. 4,600,000 c. 4,650,000 d. 4,850,000
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.
Zebra Company has determined the 2021 net income to be P 5,000,000. Revenue received in advance in 2021 of P 250,000 was credited to a revenue
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