14. Selfless Company determined that, due to the obsolescence, equipment with an original cost of P180,000 and accumulated depreciation at January 1, 2014 of P84,000 had suffered permanent impairment, and as a result should have a fair value of only P60,000 as of the beginning of the year. Additionally, the remaining useful life of the equipment was reduced from eight years to three years. If the company's policy is to credit accumulated depreciation when a PPE is impaired, how much should Selfless report as accumulated depreciation in its December 31, 2014 statement of financial position? 16. In January 2012, Ocean Corporation acquired a machinery at a cost of P1,000,000. Estimated salvage value of the machinery was P200,000 and useful life was estimated to be eight years under the straight line method of depreciation. In January 2014, Ocean had determined that there was a permanent impairment in the value of the machinery. Thus, the fair value of the said machinery is P350,000 and a remaining useful life of two years. At what amount should the machinery be reported in Ocean's December 31, 2014 statement of financial position?
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.
14. Selfless Company determined that, due to the obsolescence, equipment with an original cost of P180,000 and
16. In January 2012, Ocean Corporation acquired a machinery at a cost of P1,000,000. Estimated salvage value of the machinery was P200,000 and useful life was estimated to be eight years under the
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