A machine costing P720,000 is estimated to have a life of 10 years. If the annual rate of depreciation is 25%, using declining balance method, determine the depreciation at the end of the fifth year.

a P 40, 546

b P 56, 953

c P 65,041

d P 86, 824

## Expert Answer

This solution was written by a subject matter expert. It’s designed to help students like you learn core concepts.

Answer…..

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Solution;

Methods of Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear, or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life.

The three methods of depreciation are:

Straight-line method: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset.

Units-of-activity method: In this method of depreciation, the amount of depreciation is charged based on the unit of production each year.

Double-declining balance method (Accelerated method): In this method of depreciation, the diminishing value of the asset is taken into consideration for determining the depreciation for the succeeding years.

Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear, or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life.

Answer…

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Solution:

Calculate the total depreciation.

Year

Opening value

Depreciation at 25%

Closing value

2

1

720000

180000

540000

3

2

540000

135000

405000

4

3

405000

101250

303750

5

4

303750

75937.5

227812.5

6

5

227812.5

56953.13

170859.38

Hence ,option is b current answer.

Calculate the total depreciation.

Final answer

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Solution

hence, the option is B current answer.

B P=56,953

thank you…..