Question
Severe Company was organized on January 1, 2017. In preparing the financial statements for the year ended December 31, 2019, the entity used the following
Severe Company was organized on January 1, 2017. In preparing the financial statements for the year ended December 31, 2019, the entity used the following original cost and useful life for property, plant and equipment:
Original cost Useful life
Building P20,000,000 20 years
Machinery 15,000,000 15 years
Furniture 3,500,000 7 years
On January 1, 2020, the entity decided to review the useful life of the property, plant and equipment. On such date, the remaining useful life is 15 years for the building, 10 years for the machinery and 5 years for the furniture.
The entity will use the sum of the year's digit starting 2020. The company used a straight line method of depreciation from previous issuance of financial statements.
Required:
- Compute the accumulated depreciation on December 31, 2019
- Compute the total depreciation for December 31, 2020.
- Compute the accumulated depreciation on December 31, 2020
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