ABC Engineering Company has bought an equipment for RO 100,000 with an estimated useful life of 4 years. Accounting Manager, is responsible to calculate the depreciation to record in the books of accounting. He is confused in selecting the method of depreciation like WDV or Straight-line method. He came to know that the expected scrap value at the end of its useful life is RO 20,000. a) Why should the company record depreciation in the books of accounts? b) What would be book value of the machinery at the end 4 years using WDV method and Straight-line method. c) comment on the depreciation method
ABC Engineering Company has bought an equipment for RO 100,000 with an estimated useful life of 4 years. Accounting Manager, is responsible to calculate the depreciation to record in the books of accounting. He is confused in selecting the method of depreciation like WDV or Straight-line method. He came to know that the expected scrap value at the end of its useful life is RO 20,000. a) Why should the company record depreciation in the books of accounts? b) What would be book value of the machinery at the end 4 years using WDV method and Straight-line method. c) comment on the depreciation method
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Q2. ABC Engineering Company has bought an equipment for RO 100,000 with an estimated useful life of 4 years. Accounting Manager , is responsible to calculate the depreciation to record in the books of accounting. He is confused in selecting the method of depreciation like WDV or Straight-line method. He came to know that the expected scrap value at the end of its useful life is RO 20,000.
a) Why should the company record depreciation in the books of accounts?
b) What would be book value of the machinery at the end 4 years using WDV method and Straight-line method.
c) comment on the depreciation method that is more suitable for the accounting purpose
d) What is the scrap(salvage) value of the machine? Discuss
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