A Motor vehicle was purchased on June 1, 2012 for $525 000. It was expected to last for Five- years. Management decided to depreciate the vehicle at the rate of 20% p.a. and expensed the cost of the asset over its useful economic life in the Statement of Profit and Loss/Income Statement. Management's policy dictates, depreciate for all motor vehicles on a month by month basis. What was the depreciate charge expensed on the SPL/IS for the year ended 31 December 2012.

A Motor vehicle was purchased on June 1, 2012 for $525 000. It was expected to last for Five- years. Management decided to depreciate the vehicle at the rate of 20% p.a. and expensed the cost of the asset over its useful economic life in the Statement of Profit and Loss/Income Statement. Management's policy dictates, depreciate for all motor vehicles on a month by month basis. What was the depreciate charge expensed on the SPL/IS for the year ended 31 December 2012.

Name: A Motor vehicle was purchased on June 1, 2012 for $525 000. It was ex
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Description: A Motor vehicle was purchased on June 1, 2012 for $525 000. It was expected to last for Fiveyears. Management decided to depreciate the vehicle at the rate of 20% p.a. and expensedthe cost of the asset over its useful economic life in the Statement

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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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Question

A Motor vehicle was purchased on June 1, 2012 for $525 000. It was expected to last for Five
years. Management decided to depreciate the vehicle at the rate of 20% p.a. and expensed
the cost of the asset over its useful economic life in the Statement of Profit and Loss/Income
Statement. Management's policy dictates, depreciate for all motor vehicles on a month by
month basis.
What was the depreciate charge expensed on the SPL/IS for the year ended 31 December
2012.
Answer: 52500

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