Lina Company purchased equipment on January 1, 2022 for P5,000,000. The equipment had a useful life of five years and residual value of P600,000. The policy is to depreciate five-year assets using the double declining balance method for the first 2 years and then switch to straight line. What amount should be reported as accumulated depreciation on December 31, 2024? A. 3,000,000 B. 3,800,000 C. 3,920,000 D. 3,600,000
Lina Company purchased equipment on January 1, 2022 for P5,000,000. The equipment had a useful life of five years and residual value of P600,000. The policy is to depreciate five-year assets using the double declining balance method for the first 2 years and then switch to straight line. What amount should be reported as accumulated depreciation on December 31, 2024? A. 3,000,000 B. 3,800,000 C. 3,920,000 D. 3,600,000
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 8MC: On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was...
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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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