A building is offered for sale at $500,000 but is currently assessed at $400,000. The purchaser of the building believes the building is worth $475,000, but ultimately purchases the building for $450,000. The purchaser records the building at: a. $50,000. c. $450,000. e. $500,000. b. $400,000. d. $475,000.
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.
A building is offered for sale at $500,000 but is currently assessed
at $400,000. The purchaser of the building believes
the building is worth $475,000, but ultimately purchases the
building for $450,000. The purchaser records the building at:
a. $50,000. c. $450,000. e. $500,000.
b. $400,000. d. $475,000.
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