On July 1, 2020, Youth Corporation purchased a machine at a cost of P300,000. This machine was estimated to have a useful life of 5-years with no salvage value and was depreciated using the straight-line method. On January 2, 2023, Youth determined that this machine could no longer work efficiently, that its value had been permanently impaired, and that P90,000 could be recovered over the remaining useful life of the machine. In its December 31, 2023 statement of financial position, how much should Youth report as carrying value of the machine?
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.
On July 1, 2020, Youth Corporation purchased a machine at a cost of P300,000. This machine was estimated to have a useful life of 5-years with no salvage value and was
In its December 31, 2023
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