The Sampaguita Steam Laundry bought a laundry truck that can be used for 5 years. The cost of the truck is P225,000 with a salvage value of P35,000. Since the truck is not working efficiently, management has thought of selling the truck immediately and buy a delivery wagon which will serve the company's purposes more properly. The estimated net returns of the truck for 5 years is P150,000. If the truck is sold, management can only recover P175,000. (In all calculations, use the straight line method of depreciation) If the firm decides to keep the truck, the net gain (loss) over the 5-year period is Select the correct response: P(75,000) OP(40,000) P50,000 P140,000
The Sampaguita Steam Laundry bought a laundry truck that can be used for 5 years. The cost of the truck is P225,000 with a salvage value of P35,000. Since the truck is not working efficiently, management has thought of selling the truck immediately and buy a delivery wagon which will serve the company's purposes more properly. The estimated net returns of the truck for 5 years is P150,000. If the truck is sold, management can only recover P175,000. (In all calculations, use the straight line method of depreciation) If the firm decides to keep the truck, the net gain (loss) over the 5-year period is Select the correct response: P(75,000) OP(40,000) P50,000 P140,000
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 8PB: Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is...
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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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