Shaw Company purchased a machine for P 1 260 000 that was placed in service at year – end. The entity incurred additional costs for this machine. Shipping 30 000 Installation 40 000 Testing 50 000 At year end, what amount should be reported as machinery?
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.
- Shaw Company purchased a machine for P 1 260 000 that was placed in service at year – end. The entity incurred additional costs for this machine.
Shipping 30 000
Installation 40 000
Testing 50 000
At year end, what amount should be reported as machinery?
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