Total operating expenses of Model Service for the period is P150,000 which were all paid in cash except for the P15,000 payable in the subsequent period. The operating expenses will decrease the asset by a. P 5,000 b. P 15,000 c. P135,000 d. P150,000
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.
Total operating expenses of Model Service for the period is P150,000 which were all paid in cash except for the P15,000 payable in the subsequent period. The operating expenses will decrease the asset by
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