1. How much is the loss on replacement? 2. How much is the depreciation expense for the year 20X4? 3. How much is the book value of the aircraft on December 31, 20x5?
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.
XYZ Co. acquired an aircraft from BEG, Inc. on January 1, 20x1 for a total cost of ₱24,000,000. The aircraft, to be used in their logistics operation was estimated to have a useful life of 10 years. XYZ Co. uses the
1. How much is the loss on replacement?
2. How much is the depreciation expense for the year 20X4?
3. How much is the book value of the aircraft on December 31, 20x5?
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