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Lesson 18-19
Lesson 18-19
Straight-Line Depreciation
Lesson 18
Objectives
• Define terminologies related to asset depreciation.
• Compute depreciation expense for assets.
• Prepare journal entries relative to depreciation.
Definition
Depreciation
A decline in value of an asset due to wear and tear , obsolescence, and
passage of time.
Residual Value
Is the value expected to be left after the asset’s useful life.
Straight-line depreciation
= Annual Depreciation
Illustration 1
Jiminshi Company purchased equipment on January 1, 2020
amounting to P500,000, with residual value of P50,000 and
life of five (5) years. Prepare adjusting entries on asset
depreciation and fill up the depreciation table.
Illustration 2
2 Depreciation of automobile, ten-year useful life, P100,000 estimated residual value per vehicle.
3 Depreciation of office equipment, five-year useful life, 10% estimated residual value per set.
4 Depreciation of furniture and fixtures, five-year useful life, no residual value.