BT21 Company owns an office building and leases the office spaces under a one-year rental agreement. Not all tenants make timely payments of their rent. During the year 2020, the company received P1,500,000 from tenants. The company’s statement of financial position on December 31, 2019, reported rent receivable of P100,000 and Unearned rent revenue of P40,000. The statement of financial position on December 31, 2020, and income statement for the year ended December 31, 2020, reported rent receivable and rent revenue of P75,000 and 1,350,000 respectively. How much was BT21’s Unearned rent revenue on December 31, 2020?
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.
BT21 Company owns an office building and leases the office spaces under a one-year rental agreement. Not all tenants make timely payments of their rent. During the year 2020, the company received P1,500,000 from tenants. The company’s
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