Libras Corporation purchased a machine on July 1, 2019, for P500,000. The machine was estimated to have a useful life of 10 years with an estimated residual value of P28,000. During 2022, it became apparent that the machine would become uneconomical after December 31, 2026 and that the machine would have no scrap value. What should be the charge for depreciation in 2022? A 70,800 C. 76,400 B. 82,000 D. 95,500
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.
Libras Corporation purchased a machine on July 1, 2019,
for P500,000. The machine was estimated to have a
useful life of 10 years with an estimated residual value of
P28,000. During 2022, it became apparent that the
machine would become uneconomical after December
31, 2026 and that the machine would have no scrap
value.
What should be the charge for
A 70,800 C. 76,400
B. 82,000 D. 95,500
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