An engineer bought an equipment at P2,500,000. Delivery, installation, permits, etc. total P1,200,000. After 10years, it...

An engineer bought an equipment at P2,500,000. Delivery, installation, permits, etc. total P1,200,000. After 10years, it will sell for P500,000. By DBM, (approximate k to 2 decimal places) determine the total depreciation charge on its 5th year.

Expert Solution

The declining balance method can be measured using the following formula

Cost of equipment = P 2,500,000

Delivery, installation, permits etc = P 1,200,000

Total book value = 2,500,000 + 1,200,000 = P 3,700,000

Depreciation rate = 18.14%

From the above schedule we can see the Depreciation charges of 5th year is P 301,386.20.

Converting it to thousands terms

Total Depreciation charge of 5th year = 301,386.20 /1000 = P 301.39 K

Total accumulated depreciation till 5th year = P 1,668.71 K

Accumulated depreciation can be calculated by adding the depreciation charges of 1, 2, 3, 4 and 5th year.

Rahul Sunny answered 2 years ago

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