Atlas Company acquired PPE on January 1, 2022 consisting of: Cost Residual Value Useful Life (yrs) Building P10,000,000 350,000 25 Machinery 4,500,000 120,000 8 Equipment 2,030,000 80,000 15 4. What is the composite rate of the assets’ depreciation? a. 15.6% b. 22.25% c. 22.4% d. 25.1% 5. What is the composite life of the PPEs acquired? a. 22 years b. 25 years c. 16 years d. 18 years
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.
Atlas Company acquired PPE on January 1, 2022 consisting of:
Cost Residual Value Useful Life (yrs)
Building P10,000,000 350,000 25
Machinery 4,500,000 120,000 8
Equipment 2,030,000 80,000 15
4. What is the composite rate of the assets’
a. 15.6%
b. 22.25%
c. 22.4%
d. 25.1%
5. What is the composite life of the PPEs acquired?
a. 22 years
b. 25 years
c. 16 years
d. 18 years
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