The cost of a machine is 18,000 with a salvage value of RO 4270 at the end of its life of five years. Applying written down value method, the depreciation for the second year is ______________. a. RO 4500 b. RO 3375 c. RO 10125 d. RO 13500
The cost of a machine is 18,000 with a salvage value of RO 4270 at the end of its life of five years. Applying written down value method, the depreciation for the second year is ______________. a. RO 4500 b. RO 3375 c. RO 10125 d. RO 13500
Chapter9: Capital Budgeting And Cash Flow Analysis
Section9.A: Depreciation
Problem 3P
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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The cost of a machine is 18,000 with a salvage value of RO 4270 at the end of its life of five years. Applying written down value method, the depreciation for the second year is ______________.
a.
RO 4500
b.
RO 3375
c.
RO 10125
d.
RO 13500
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