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Let me start by discussing the flow of our presentation which contains the
following major topics”
Bago naten I discuss ang depreciation lets have an introduction kung baket nga
ba tayo nagkakaroon ng depreciation
Introduction
The Property, Plant and Equipment except Land, normally are usable for a number of
years after which the assets have relatively little value either for service or for sale.
Since kase ang property plant and equipment is naguundergo ng usage such as for use
in production, in manufacturing business, for use in sale in merchandising and also for
use in rendering service.
Additionally, The difference between the original cost of a PPE and any remaining value
when it is retired or worn out is an expense that should be allocated in a period which
the asset is being used.
Meaning Cost minus carrying value ng PPE is the expense na iaalocate naten sa period
na kung saan ginamit yun PPE
The portion that is allocated to expense in a particular period is referred to as
depreciation, depletion and amortization.
And also there are factors affecting the DETERMINATION OF ESTIMATED USEFUL LIFE
Physical factors
a. Expected usage of the asset is a usage that is assessed by reference to the asset’s
expected capacity or physical output
b. Expected physical wear and tear – which depends on the operational factors such
as number of shifts the asset is used, repair and maintenance and maintenance of asset
while idle.
c. Passage of time which is normally due to non use since depreciation is a continues
process.
Functional Factors