On January 1, 2017, Loko Corporation acquired equipment at a cost of ₱1,800,000. Loko adopted the sum-of-the-years’ digits method of depreciation for this equipment and had been recording depreciation over an estimated life of eight years, with no residual value. At the beginning of 2020, a decision was made to change to the straight-line method of depreciation for this equipment. The depreciation expense for 2020 would be P150,000 P360,000 P93,750 P225,000
On January 1, 2017, Loko Corporation acquired equipment at a cost of ₱1,800,000. Loko adopted the sum-of-the-years’ digits method of depreciation for this equipment and had been recording depreciation over an estimated life of eight years, with no residual value. At the beginning of 2020, a decision was made to change to the straight-line method of depreciation for this equipment. The depreciation expense for 2020 would be P150,000 P360,000 P93,750 P225,000
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
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 8MC: On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was...
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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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- On January 1, 2017, Loko Corporation acquired equipment at a cost of ₱1,800,000. Loko adopted the sum-of-the-years’ digits method of
depreciation for this equipment and had been recording depreciation over an estimated life of eight years, with no residual value. At the beginning of 2020, a decision was made to change to the straight-line method of depreciation for this equipment. The depreciation expense for 2020 would be- P150,000 P360,000
- P93,750 P225,000
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