Land - Php10,000, Salvage Value - 1,000, Useful Life 9 years. How much is the Annual Depreciation Expense?
Question
Land - Php10,000, Salvage Value - 1,000, Useful Life 9 years. How much is the Annual Depreciation Expense?
Solution
To calculate the annual depreciation expense, you can use the straight-line depreciation method. Here are the steps:
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Determine the cost of the asset: In this case, the cost of the land is Php10,000.
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Determine the salvage value of the asset: The salvage value is the estimated value of the asset at the end of its useful life. In this case, the salvage value is Php1,000.
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Determine the useful life of the asset: The useful life is the estimated number of years the asset is expected to be used. In this case, the useful life is 9 years.
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Subtract the salvage value from the cost of the asset: Php10,000 - Php1,000 = Php9,000. This is the total depreciation over the asset's useful life.
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Divide the total depreciation by the useful life of the asset: Php9,000 / 9 years = Php1,000.
So, the annual depreciation expense is Php1,000.
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