Recognition
It may acquired through donation, transfer from another
government agency, purchase or construction.
PPE are initially recognized at cost which includes the
purchase price and incidental expenses such as import
duties, freight, installation and any other directly
attributable costs. The donated and leased property shall
be based on its fair value or appraised value. There is no
standard minimum length of life for the assets to be
classified as PPE or plant assets but that they are
normally expected to last more than one year.
Accounts
Acct. code
Debit
Machinery
1-06-05-010
100,000
Accounts
Payable
2-01-01-10
Credit
100,000
MACHINERY
Accounting Code: 1-05-05-010
Normal Balance: Debit
Description: debit this to record the cost incurred in the
purchase assembly or fair value, if acquired through
donation of other machinery. Credits when disposal or
derecognition of the carrying amount of the replaced
parts in major repairs.
OFFICE EQUIPMENT
ACCOUNT NUMBER: 1-06-05-20
NORMAL BALANCE: Debit
DESCRIPTION: debit to record the cost incurred in the
purchase or assembly or fair value, if acquired through
donation or transfers without cost, of office equipment for
use in government operations. It includes
duplicating/photocopying machines, air conditioning units
and the like. Credits when disposal or derecognition of
the carrying amount of the replaced parts in major
repairs.
Information and
Communication Technology
Equipment
Account
Number
Normal
Balance
1-06-05-030
Debit
Cost/Appraised value of
ICT equipment and
Description software acquired
Agricultural and
Forestry Equipment
ACCOUNT NUMBER: 1-06-05-040
NORMAL BALANCE: DEBIT
DESCRIPTION: debit this to record the
cost incurred in the purchase assembly or
fair value, if acquired through donation of
other machinery. Credits when disposal or
derecognition of the carrying amount of
the replaced parts in major repairs.
Marine and Fishery
Equipment
ACCOUNT NUMBER: 1-06-05-050
NORMAL BALANCE: DEBIT
DESCRIPTION: debit this to record the
cost incurred in the purchase assembly or
fair value, if acquired through donation of
other machinery. Credits when disposal or
derecognition of the carrying amount of
the replaced parts in major repairs.
Airport Equipment
Account Number: 1-06-05-060
Normal Balance: Debit
Description: Cost incurred in the
purchase or assembly or fair value,
if donation or transfer without cost
or for use in government
operations.
Communication
Equipment
Account Number: 1-06-05-070
Normal Balance: Debit
Description: Cost incurred in the
purchase or assembly or fair value, if
donation or transfer without cost or for
use in government operations.
Construction and
Heavy Equipment
Account Number: 1-06-05-080
Normal Balance: Debit
Description: Cost incurred in the
purchase or assembly or fair value, if
donation or transfer without cost or for
use in government operations.
Disaster Response and
Rescue Equipment
Account Number: 1-06-05-090
Normal Balance: Debit
Description: Cost incurred in the
purchase or assembly or fair value, if
donation or transfer without cost or for
use in government operations.
Medical Equipment
Account Number: 1-06-05-110
Normal Balance: Debit
Description: Cost incurred in the
purchase or assembly or fair value, if
donation or transfer without cost or for
use in government operations.
Military, Police and
Security and
Equipment
Account Number: 1-06-05-100
Normal Balance: Debit
Description: Cost incurred in the
purchase or assembly or fair value, if
donation or transfer without cost or for use
in government operations.
Technical And
Scientific Equipment
Account Number: 1-06-05-140
Normal Balance: Debit
Description: Cost incurred in the
purchase or assembly or fair value, if
donation or transfer without cost or for
use in government operations.
Sports Equipment
Account Number: 1-06-05-130
Normal Balance: Debit
Description: Cost incurred in the
purchase or assembly or fair value, if
donation or transfer without cost or for
use in government operations.
Other Machinery and
Equipment
Account Number: 1-06-05-990
Normal Balance: Debit
Description: Cost incurred in the
purchase or assembly or fair value,
if donation or transfer without cost
or for use in government
operations.
Transportati
on
Equipment
Motor Vehicle
Account Number: 1-06-06-010
Normal Balance: Debit
Description: Cost incurred in the
purchase or assembly or fair value, if
donation or transfer without cost or for
use in government operations.
Trains
Account Number: 1-06-06-020
Normal Balance: Debit
Description: Cost incurred in the
purchase or assembly or fair value, if
donation or transfer without cost or for
use in government operations.
Aircrafts and
Aircrafts Ground
Equipment
Account Number: 1-06-06-030
Normal Balance: Debit
Description: Cost incurred in the
purchase or assembly or fair value, if
donation or transfer without cost or for
use in government operations.
Watercrafts
Account Number: 1-06-06-040
Normal Balance: Debit
Description: Cost incurred in the
purchase or assembly or fair value, if
donation or transfer without cost or for
use in government operations.
Other Transportation
Equipment
Account Number: 1-06-06-010
Normal Balance: Debit
Description: Cost incurred in the
purchase or assembly or fair value, if
donation or transfer without cost or for
use in government operations.
DEPRECIA
TION
Accounting for
Depreciation
The straight-line method of depreciation for PPE and
leased property is followed and depreciation is
recorded starting in the month following date of
purchase.
3 factors to compute depreciation:
1. Asset cost
2. Estimated useful life –expected to be used by the
agency
3. Residual value- amount expects to obtain for the
asset at the end of it useful life after deducting
the expected cost of disposal.
The depreciable cost will be equal to the asset cost
minus residual value.
DEPRECIATIONMachinery and
Equipment
Acct. no: 5-05-01-050
Normal Balance: Debit
Description: it is used to record the
periodic allocation of cost for the wear
and tear of Machinery and Equipment.
Subsidiary Ledger
DepreciationTransportation
Equipment
Acct. no: 5-05-01-060
Normal Balance: Debit
Description: used to record the periodic
allocation of cost for the wear and tear of
transportation equipment.
Depreciation- Other
Property and
Equipment
Acct no.: 5-05-01-990
Normal Balance: Debit
Description: it is used to record the
periodic allocation of cost for the wear
and tear of the other property, plant and
equipment.
Accumulated
DEPRECIATIONMACHINERY
Account Number: 1-06-05-11
Normal Balance : Credit
Description: credited for the allocation of cost of
machinery in accordance with prescribed policy
on Depreciation.
Accumulated Impairment
Loss – Machinery
ACCOUNT NUMBER: 1-06-05-012
NORMAL BALANCE: Credit
DESCRIPTION: it is credited for the
amount recognized to reduce machinery
to its recoverable amount due to
impairment. Debit this account upon
disposal, derecognition of the asset or
reversal of impairment.
ACCUMULATED DepreciationOFFICE EQUIPMENT
ACCOUNT NUMBER: 1-06-05-21
NORMAL BALANCE: CREDIT
DESCRIPTION: IT IS CREDITED FOR THE
ALLOCATION OF COST OF OFFICE EQUIPMENT IN
ACCORDANCE WITH THE PRESCRIBED POLICY
ON DEPRECIATION. DEBIT THIS ACCOUNT UPON
DISPOSAL
ACCUMULATED IMPAIRMENT
LOSS- OFFICE EQUIPMENT
ACCOUNT NUMBER: 1-06-05-22
NORMAL BALANCE: CREDIT
DESCRIPTION: IT IS RECOGNIZED TO REDUCE
THE OFFICE EQUIPMENT TO ITS RECOVERABLE
AMOUNT DUE TO IMPAIRMENT. DEBIT WHEN
UPON DISPOSAL OR REVERSAL OF IMPAIRMENT.
Accumulated Depreciation Information and Communication
Technology Equipment
Account
Number
1-06- 05-031
Normal
Balance
Allocation of cost in
accordance with the
prescribed policy of
depreciation
Description
Credit
Accumulated
Impairment Losses- ICT
Account Number: 1-06- 05-032
Normal Balance : Credit
Description: recognized to reduce ICT
equipment to their recoverable amount
of impairment. Debit upon disposal or
reversal of impairment.
Accumulated Depreciation –
Agricultural and Forestry
Equipment
Account Number: 1-06-05-041
Normal Balance : Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Accumulated Impairment
Losses- Agricultural and
Forestry Equipment
Account Number:
1-06- 05-042
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment.
Accumulated Depreciation –
Marine and Fishery Equipment
Account Number: 1-06-05-051
Normal Balance: Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Accumulated Impairment
Losses- Marine and Fishery
Equipment
Account Number:
1-06- 05-052
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment.
Accumulated Depreciation
–Airport Equipment
Account Number: 1-06-05-061
Normal Balance : Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment
Accumulated Depreciation –
Communication Equipment
Account Number: 1-06-05-071
Normal Balance : Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Accumulated Impairment
Losses- Communication
Equipment
Account Number:
1-06- 05-072
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment.
Accumulated Depreciation –
Construction and Heavy
Equipment
Account Number: 1-06-05-081
Normal Balance : Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Accumulated Impairment LossesConstruction and Heavy
Equipment
Account Number:
1-06- 05-082
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment.
Accumulated Depreciation –
Disaster Response and Rescue
Equipment
Account Number: 1-06-05-081
Normal Balance: Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Accumulated Impairment LossesDisaster Response and Rescue
Equipment
Account Number:
1-06- 05-082
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment.
Accumulated Depreciation –
Other Machinery And
Equipment
Account Number: 1-06-05-991
Normal Balance: Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Accumulated Impairment
Losses- Other Machinery and
Equipment
Account Number:
1-06- 05-992
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment.
Accumulated Depreciation
–Medical Equipment
Account Number: 1-06-05-111
Normal Balance: Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Accumulated Impairment
Losses- Medical Equipment
Account Number:
1-06- 05-112
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment.
Accumulated Depreciation –
Military, Police and Security
Equipment
Account Number: 1-06-05-101
Normal Balance: Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Accumulated Impairment
Losses- Military, Police and
Security Equipment
Account Number:
1-06- 05-102
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment.
Accumulated Depreciation
–Sports Equipment
Account Number: 1-06-05-131
Normal Balance: Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment.
Accumulated Depreciation –
Technical and Scientific
Equipment
Account Number: 1-06-05-141
Normal Balance: Credit
Description: Allocation of cost in
accordance with the prescribed
policy of depreciation
Accumulated Impairment
Losses- Technical and Scientific
Equipment
Account Number:
1-06- 05-142
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment.
Accumulated Depreciation –
Other Machinery and
Equipment
Account Number: 1-06-05-991
Normal Balance: Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Accumulated Impairment
Losses- Other and Machinery
Equipment
Account Number:
1-06- 05-992
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment.
Accumulated Depreciation
–Motor Vehicle
Account Number: 1-06-06-11
Normal Balance: Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Accumulated Impairment
Losses- Motor Vehicle
Account Number:
1-06- 06-012
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment.
Accumulated
Depreciation –Trains
Account Number: 1-06-06-021
Normal Balance: Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment.
Accumulated Depreciation –
Aircrafts and Aircrafts Grounds
Equipment
Account Number: 1-06-06-031
Normal Balance: Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Accumulated Impairment
Losses- Aircrafts and Aircrafts
Grounds Equipment
Account Number:
1-06- 06-032
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment
Accumulated Depreciation
–Watercrafts
Account Number: 1-06-06-041
Normal Balance: Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Accumulated Depreciation –
Other Transportation
Equipment
Account Number: 1-06-06-990
Normal Balance: Credit
Description: Allocation of cost in
accordance with the prescribed policy of
depreciation
Accumulated Impairment
Losses- Other Property and
Equipment
Account Number:
1-06- 06-012
Normal Balance : Credit
Description: recognized to reduce to
their recoverable amount of impairment.
Debit upon disposal or reversal of
impairment.
Repair and
Maintenance
Expenses
MaintenanceMachinery and
Equipment
Account Number: 5-02-13-050
Normal Balance: Debit
Description: it is used to record cost of
repairs and maintenance on machineries
and equipment. This account shall be
closed to the Income and Expense
Summary Account.
Subsidiary ledgers:
MaintenanceTransportation
Equipment
Acct. no: 5-02-13-060
Normal Balance: Debit
Description: used to record the cost of
repair and maintenance of transportation
equipment.
IMPAIRMENT LOSSPPE
ACCOUNT NUMBER:5-05-03-090
NORMAL BALANCE: DEBIT
DESCRIPTION: it is used to record the
loss incurred due to impairment of
property, plant and equipment whose
carrying amount is greater than
depreciated replacement cost.
DISPOSAL OF
AGENCY ASSETS
PPE are still serviceable but are no longer
used shall be properly classified. This
facilitates the disposal of assets that are
no longer useful to the agency since the
information on these assets is readily
available. The assets may be disposed
through sale, transfer/ donation and
destruction.
DERECOGNITION
It shall be derecognized on disposal or
when no future economic benefits are
expected from its use or disposal.
DISPOSAL THROUGH TRANSFER OR
DESTRUCTION
ACCOUNTS
ACCT.CODE
DEBIT
Accumulated
depreciation- medical
equipment
1-06-05-20
90,000
Medical
Equipment
1-06-05-021
CREDIT
90,000
DISPOSAL
THROUGH SALE
Cost of Computers
Less: Accumulated
Depreciation
Book Value
P8000
6000
P2000
If the selling price is P2000
Cash-Collecting
Officers
Accumulated
Depreciation-office
Equipment
Office
Equipment
2000
6000
8000
Below the book value
Cash-Collecting Officers
Accumulated Depreciation
– Office Equipment
Loss on Sale of Assets
Office Equipment
1500
6000
500
8000
Higher than the book value
Cash-Collecting
Officers
Accumulated
Depreciation – Office
Equipment
Gain on Sale of
Assets
Office
Equipment