Spiderman Company owns a machine that was bought on January 1, 2005 for P3,760,000. The machine was estmated to have a useful life of five years and a residual value of P240,000. Spiderman uses the sum of years' digits method of depreciation. At the beginning of 2008, Spiderman determined that the total useful life of the machine should have been four years and the residual value is P352,000. For the year 2008, Spiderman should record depreciation expense on this amchine at a. 192,000 b. 444,000 c. 592,000 d. 704,000
Spiderman Company owns a machine that was bought on January 1, 2005 for P3,760,000. The machine was estmated to have a useful life of five years and a residual value of P240,000. Spiderman uses the sum of years' digits method of depreciation. At the beginning of 2008, Spiderman determined that the total useful life of the machine should have been four years and the residual value is P352,000. For the year 2008, Spiderman should record depreciation expense on this amchine at a. 192,000 b. 444,000 c. 592,000 d. 704,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 11E: On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an...
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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.
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