XYZ Firrn bought P200,000 worth of office equipment its useful life is 6 years with residual value of P20,000. Accumulated Depreciation had a balance of P60,000 prior to the recording of this year's depreciation. How much is the depreciation expense for the current

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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.