A company imported a new manufacturing machine for their plant, paying P 850,000 to the Manufacturer. Freight and Insurance charges amounted to P 28,000; customs’ broker’s fees and arrastre services, P 18,500; taxes, permits and other expenses, P 25,000. If San Miguel Corporation estimates the life of the machine to be 7 years with a salvage value of P 320,000, determine the book value at the end of 4 years, using the Double Declining Balance Method. (pls write your solution on a paper)
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.
A company imported a new manufacturing machine for their plant, paying P 850,000
to the Manufacturer. Freight and Insurance charges amounted to P 28,000; customs’ broker’s fees
and arrastre services, P 18,500; taxes, permits and other expenses, P 25,000. If San Miguel
Corporation estimates the life of the machine to be 7 years with a salvage value of P 320,000,
determine the book value at the end of 4 years, using the Double Declining Balance Method. (pls write your solution on a paper)
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