A man bought an equipment which cost P524.000.00. Freight and installation expenses cost him P31,000.00. If the life of the equipment is 15 years with an estimated salvage value of P 120,000.00, find its book value after 8 years. Ans. P323,000.00.Show the step by step solution and explanation.

A man bought an equipment which cost P524.000.00. Freight and installation expenses cost him P31,000.00. If the life of the equipment is 15 years with an estimated salvage value of P 120,000.00, find its book value after 8 years. Ans. P323,000.00.Show the step by step solution and explanation.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter18: Accounting For Long-term Assets

Section: Chapter Questions

Problem 6CE

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Question

A man bought an equipment which cost P524.000.00. Freight and installation expenses cost him P31,000.00. If the life of the
equipment is 15 years with an estimated salvage value of P 120,000.00, find its book value after 8 years. Ans. P323,000.00.Show
the step by step solution and explanation.

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Step 1: Introduce to depreciation expense

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Step 2: Working for original cost of equipment

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Step 3: Working for annual depreciation expense

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Step 4: Working for accumulated depreciation at end of year 8

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Step 5: Working for book value of equipment after 8 year

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Solution

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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation

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