Mr. Badoy acquires a new company asset for fabrication purposes. Acquisition costs 1,500,000 pesos plus 15% transportation cos 12% taxes and duties, and 10% commissioning and installation cost. If the working life of the machine is 15 yrs and the salvage value is 20% of the total first cost and money grows for 12% interest compounded annually compute the Book value at years 8,10 and 12 using SLM, SFM, DBM, ĎDBM, and SYD..
Mr. Badoy acquires a new company asset for fabrication purposes. Acquisition costs 1,500,000 pesos plus 15% transportation cos 12% taxes and duties, and 10% commissioning and installation cost. If the working life of the machine is 15 yrs and the salvage value is 20% of the total first cost and money grows for 12% interest compounded annually compute the Book value at years 8,10 and 12 using SLM, SFM, DBM, ĎDBM, and SYD..
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter18: Accounting For Long-term Assets
Section: Chapter Questions
Problem 6CE
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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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