On January 2, 2017, Union Co. purchased a machine for P264,000 and depreciated it by the straight-line method using an estimated useful life of eigh years with no salvage value. On January 2, 2020, Union determined that the machine had a useful life of six years from the date of acquisition and will have salvage value of P24,000. An accounting change was made in 2020 to reflect the additional data. The accumulated depreciation for this machine should hau a balance at December 31, 2020, of
On January 2, 2017, Union Co. purchased a machine for P264,000 and depreciated it by the straight-line method using an estimated useful life of eigh years with no salvage value. On January 2, 2020, Union determined that the machine had a useful life of six years from the date of acquisition and will have salvage value of P24,000. An accounting change was made in 2020 to reflect the additional data. The accumulated depreciation for this machine should hau a balance at December 31, 2020, of
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 9MCQ: Chapman Inc. purchased a piece of equipment in 2018. Chapman depreciated the equipment on a...
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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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