Delivery equipment that cost P190,000 was being used by Magadjust Tayo Store. The equipment was estimated to have a useful life of five years and a residual value of P10,000. The equipment was acquired on March 1, 200B. The asset will be depreciated evenly over its useful life. What is the necessary adjusting entry on December 31, 200B for Magadjust Tayo Store? Options: DEBIT: Depreciation expense, P30,000; CREDIT: Accum. Depreciation – Equip., P30,000
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.
Delivery equipment that cost P190,000 was being used by Magadjust Tayo Store. The equipment was estimated to have a useful life of five years and a residual value of P10,000. The equipment was acquired on March 1, 200B. The asset will be depreciated evenly over its useful life. What is the necessary
Options:
DEBIT:
DEBIT: Depreciation expense, P36,000; CREDIT: Accum. Depreciation – Equip., P36,000
DEBIT: Depreciation expense, P33,000; CREDIT: Accum. Depreciation – Equip., P33,000
DEBIT: Depreciation expense, P31,667; CREDIT: Accum. Depreciation – Equip., P31,667
DEBIT: Depreciation expense, P38,000; CREDIT: Accum. Depreciation – Equip., P38,000
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