A building with an appraisal value of $133,629 is made available at an offer price of $158,926. The purchaser acquires the property for $32,500 in cash, a 90-day note payable for $21,429, and a mortgage amounting to $57,891. The cost basis recorded in the buyer's accounting records to recognize this purchase is
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 with an appraisal value of $133,629 is made available at an offer price of $158,926. The purchaser acquires the property for $32,500 in cash, a 90-day note payable for $21,429, and a mortgage amounting to $57,891. The cost basis recorded in the buyer's accounting records to recognize this purchase is
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