Mercury Drug purchased a Laboratory equipment for P 100,000 and plans to keep it for 15 years. If the salvage value is Php 15,000 at the end of 15th year, what is the depreciation in the third year? Use Sum of the Years Method. (Show your solution by using the long method by tabulating)
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.
Mercury Drug purchased a Laboratory equipment for P 100,000 and plans to keep it
for 15 years. If the salvage value is Php 15,000 at the end of 15th year, what is the
the third year? Use Sum of the Years Method. (Show your solution by using the long method by
tabulating)
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