Example 1 An asset is purchased for P 9000 Its estimated life is 10 years after

# Example 1 an asset is purchased for p 9000 its

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Example 1: An asset is purchased for P 9000. Its estimated life is10 years, after which is will be sold for P 1,000. Using SOYD(a) Find the book value during the 3rdyear.(b) Find the depreciation during the 2ndyear.(c) Find the total depreciation after 4 years. Example 2: Mr. Q purchased a Bulk Milk Cooler for P 480,000.00.Shipping, tax, and installation costs amounted to P 25,000.00, P20,000.00 and P 15,000.00. The machine has a useful life of 7years and salvage value of P 40,000.(a) Determine the book value after four years.(b) Determine the depreciation charge on its last year of service.(c) Determine the total depreciation after 3 years. Example 3: A telephone company purchased microwave radioequipment for P 6 million, freight and installation chargesamounted to 4% of the purchased price. If the equipment will bedepreciated over a period of 10 years with a salvage value of 8%,determine the depreciation cost during 5thyear using SYD. Example 4: A company purchases an asset for P 10,000.00 andplans to keep it for 20 years. If the salvage value is zero at the endof the 20thyear:(a) What is the depreciation in the third year?(b) What is the total depreciation at the end of 14 years?(c) What is the book value of the asset at the end of 8 years? Use sum-of-the-year’s digits depreciation. Example 5: An equipment costing P 500,000.00 has a lifeexpectancy of 5 years. Using some-of-the-year’s digit method ofdepreciation, what must be its salvage value such that itsdepreciation charge for the first year is P 100,000.00? Service-Output MethodService-Output Method– a method which assumes that the totaldepreciation that has taken place is directly proportional to thequantity of output of the property up to that time. SAMPLE PROBLEMS Example 1: A television company purchased machinery for P100,000 on July 1, 1979. It is estimated that it will have a usefulof 10 years, scrap value of P 4,000, production of 400,000 unitsand working hours of 120,000. The company uses the machineryfor 14,000 hours in 1979 and 18,000 hours is 1980. Themachinery produces 36,000 units in 1979 and 44,000 units in1980. Compute the depreciation charge for 1980 using eachmethod given below:(a) Straight Line Method