Purchased for P5,500,000, including appraiser fee of P100,000´a warehouse building and the land on which it is located. The land had an appraised value of P2,000,000 and original cost of P1,400,000. The building had an appraised value of P3,000,000 and original cost of P2,500,000. 4. Purchased an office building and the land on which it is located for P7,500,000 cash and assumed an existing P2,500,000 mortgage. For realty tax purposes, the property is assessed at P9,600,000, 60% of which is allocated to building. Required: Prepare journal entries to record the transactions for the current year.
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.
Purchased for P5,500,000, including appraiser fee of P100,000´a warehouse building and the land on which it is located. The land had an appraised value of P2,000,000 and original cost of P1,400,000. The building had an appraised value of P3,000,000 and original cost of P2,500,000. 4. Purchased an office building and the land on which it is located for P7,500,000 cash and assumed an existing P2,500,000 mortgage. For realty tax purposes, the property is assessed at P9,600,000, 60% of which is allocated to building. Required: Prepare
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