. On January 1, 2018 an entity purchased for P4,800,000 machine with useful life of ten years on residual of P200,000. The machine was depreciated by the double declining balance method. The entity changed to the straight line method on January 1, 2020 and the residual value did not change. What is the accumulated depreciation on December 31,2020? a. 2,087,000 c. 2.188,000 b. 2,112,000 d. 2,015,200
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.
7. On January 1, 2018 an entity purchased for P4,800,000 machine with useful life of ten years on residual of
P200,000. The machine was
depreciation
a. 2,087,000 c. 2.188,000
b. 2,112,000 d. 2,015,200
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