In 1999, Morton Company purchased a tract of land as a possible future plant site. In January, 2007, valuable sulphur deposits were discovered on adjoining property and Morton Company immediately began explorations on its property. In December, 2007, after incurring P400,000 in exploration costs, which were accumulated in an expense account, Morton discovered sulphur deposits appraised at P2,250,000 more than the value of the land. To record the discovery of the deposits, Morton should O debit P2,250,000 to an asset account O debit P400,000 to an asset account O debit P2,650,000 to asset account O make no entry O Answer not given
In 1999, Morton Company purchased a tract of land as a possible future plant site. In January, 2007, valuable sulphur deposits were discovered on adjoining property and Morton Company immediately began explorations on its property. In December, 2007, after incurring P400,000 in exploration costs, which were accumulated in an expense account, Morton discovered sulphur deposits appraised at P2,250,000 more than the value of the land. To record the discovery of the deposits, Morton should O debit P2,250,000 to an asset account O debit P400,000 to an asset account O debit P2,650,000 to asset account O make no entry O Answer not given
Century 21 Accounting General Journal
11th Edition
ISBN:9781337680059
Author:Gilbertson
Publisher:Gilbertson
Chapter19: Accounting For Plant Assets, Depreciation, And Intangible Assets
Section: Chapter Questions
Problem 1AFE
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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.
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