What is the amount of profit or loss to be recognized for the year ended December 31, 2013? a. 36,000 b. (12,800) c. 184,000 d. 171,200
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.
What is the amount of profit or loss to be recognized for the year ended December 31, 2013?
a. 36,000
b. (12,800)
c. 184,000
d. 171,200
![On March 1, 2011, GG Company contracted to construct a factory building far HH Mfg. For a
total contract price of P1, 344, 000. The building was completed by October 31, 2013. The
company uses percentage of completion method.
Contract costs incurred during the year
Estimated costs to complete the contract
Billings during the year
2011
P512, 000
512, 000
512,000
2012
P416,000
232, 000
560, 000
2013
P232, 000
272, 000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff79a4373-0974-43de-8fa9-3d135b89b481%2F95f8b01b-204e-4a55-a023-c244e8dcdfef%2Fb20a1xr_processed.png&w=3840&q=75)
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