Jhonson Co. provided the following information regarding an automobile; Acquisition date April 1, 2020 Acquisition cost P5,000,000 Useful life (in years) 5 Useful life (in miles) 100,000 P1,000,000 Residual value Actual miles driven 2020 20,000 2021 15,000 Required: 1. Compute for the depreciation expense for 2020 using the: a. Straight-line method. b. Sum-of-the-years' digits (SYD) method. c. Double-declining balance method.
Jhonson Co. provided the following information regarding an automobile; Acquisition date April 1, 2020 Acquisition cost P5,000,000 Useful life (in years) 5 Useful life (in miles) 100,000 P1,000,000 Residual value Actual miles driven 2020 20,000 2021 15,000 Required: 1. Compute for the depreciation expense for 2020 using the: a. Straight-line method. b. Sum-of-the-years' digits (SYD) method. c. Double-declining balance method.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 8P: Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of...
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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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