The Harry Corporation purchased a machine on January 1, 2020. The machine cost 46,000, with an estimated salvage value of P 2,000 and an estimated useful life of 10 years. As a result of technological improvements, a revision of the machine's useful life and estimated salvage value was made. On January 1, 2021, the equipment was estimated to last through 2022, with an estimated value at the end of 2022 of P 500. Harry uses the straight-line depreciation method. What is the revised depreciation in year 2021?
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.
The Harry Corporation purchased a machine on January 1, 2020. The machine cost 46,000, with an estimated salvage value of P 2,000 and an estimated useful life of 10 years. As a result of technological improvements, a revision of the machine's useful life and estimated salvage value was made. On January 1, 2021, the equipment was estimated to last through 2022, with an estimated value at the end of 2022 of P 500. Harry uses the
What is the revised depreciation in year 2021?
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