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Problem 1: A truck was acquired on July 1, 2018, at a cost of P216,000. The truck had a six-year useful life and an estimated salvage value of P24,000. The straight-line method of depreciation was used. On January 1, 2021, the truck was overhauled at a cost of P20,000, which extended the useful life of the truck for an additional two years beyond that originally estimated (salvage value is still estimated at P24,000). In computing depreciation for annual adjustment purposes, expense is calculated for each month the asset is owned. Prepare the appropriate entries for January 1, 2021 and December 31, 2021. Show supporting computations.
Financial Statement Analysis and Preparation
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