A property with a depreciable cost of ₱5,600,000 with original residual value of ₱200,000 after 15 years of useful life, had been revalued at a replacement cost of ₱6,500,000 with a residual of ₱50,000. About 1/3 of the asset's life had expired and the straight line method for depreciation is used. 1. Compute for the revaluation surplus and provide the correct journal entry. 2. What is the age of the asset in years?
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.
A property with a
1. Compute for the revaluation surplus and provide the correct
2. What is the age of the asset in years?
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