A computer is sold on 1 June 2022. The details are as follows: (i) Cost $11,000 (being $10,000 plus $1000 GST) (ii) Accumulated Depreciation 1/7/2021 $4,000 (iii) Depreciation Method - Prime cost, 24% (iv) Consideration/sale proceeds of $3,000 (GST excl) which has been posted already from client to the computer asset account and has to be re-allocated). Prepared the required entries to correctly accouny for the disposal including depreciation up to the time of sale.
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 computer is sold on 1 June 2022. The details are as follows:
(i) Cost $11,000 (being $10,000 plus $1000 GST)
(ii)
(iii) Depreciation Method - Prime cost, 24%
(iv) Consideration/sale proceeds of $3,000 (GST excl) which has been posted already from client to the computer asset account and has to be re-allocated).
Prepared the required entries to correctly accouny for the disposal including depreciation up to the time of sale.
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