On January 1, 20x1, COCO Co. acquired a piece of equipment with an estimated useful life of 4 years and a residual value of ₱80,000 for a total purchase cost of ₱400,000. At normal capacity, the equipment’s estimated service life is 40,000 hours or a total productive capacity of 160,000 units of a product. In 20x1 and 20x2, the actual manufacturing hours were 16,000 and 8,000, respectively, and the actual units produced were 60,000 and 30,000, respectively. How much is the accumulated depreciation on December 31, 20x2 under each of the following depreciation methods? SLM SYD DDB UOPM (input) UOPM (output)
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.
On January 1, 20x1, COCO Co. acquired a piece of equipment with an estimated useful life of 4 years and a residual value of ₱80,000 for a total purchase cost of ₱400,000. At normal capacity, the equipment’s estimated service life is 40,000 hours or a total productive capacity of
160,000 units of a product. In 20x1 and 20x2, the actual manufacturing hours were 16,000 and 8,000, respectively, and the actual units produced were 60,000 and 30,000, respectively.
How much is the
SLM SYD DDB UOPM (input) UOPM (output)
Problem 3: ABC Co. exchanged equipment with DEF, Inc. Pertinent data are shown below:
ABC Co. DEF, Inc.
Equipment |
4,000,000 |
8,000,000 |
Accumulated depreciation |
800,000 |
3,200,000 |
Carrying amount |
3,200,000 |
4,800,000 |
Fair value |
3,800,000 |
4,400,000 |
Cash paid by ABC to DEF
|
600,000 |
600,000 |
In DEF’s books, what amounts are recognized for the following?
Equipment Gain (Loss) Equipment Gain (Loss)
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