In the beginning of 2021, Ciento Company purchased equipment worth P250,000. It is estimated to be useful for 5 years and has a residual value of P25,000. 1. If this equipment will be depreciated over the course of its useful life by the double declining balance method, what amount of depreciation should be recorded for 2023? a. P32,400 b. P21,600 c. P12,960 d. P7,400 2. What is the 5th year depreciation if the 150% declining balance method is used? a. P32,400 b. P35,025 c. P18,007.5 d. P18,975

In the beginning of 2021, Ciento Company purchased equipment worth P250,000. It is estimated to be useful for 5 years and has a residual value of P25,000. 1. If this equipment will be depreciated over the course of its useful life by the double declining balance method, what amount of depreciation should be recorded for 2023? a. P32,400 b. P21,600 c. P12,960 d. P7,400 2. What is the 5th year depreciation if the 150% declining balance method is used? a. P32,400 b. P35,025 c. P18,007.5 d. P18,975

Name: In the beginning of 2021, Ciento Company purchased equipment worthP25
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Description: In the beginning of 2021, Ciento Company purchased equipment worthP250,000. It is estimated to be useful for 5 years and has a residual valueof P25,000.1. If this equipment will be depreciated over the course of its usefullife by the double declinin

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

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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Question

In the beginning of 2021, Ciento Company purchased equipment worth
P250,000. It is estimated to be useful for 5 years and has a residual value
of P25,000.
1. If this equipment will be depreciated over the course of its useful
life by the double declining balance method, what amount of
depreciation should be recorded for 2023?
a. P32,400
b. P21,600
c. P12,960
d. P7,400
2. What is the 5th year depreciation if the 150% declining balance
method is used?
a. P32,400
b. P35,025
c. P18,007.5
d. P18,975

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