At 1 January 2011 LG Co carried its office block in its financial statements at its original cost of $1 million less depreciation of $200,000 (based on its original life of 25 years). LG Co decided to revalue the office block on 1 July 2011 to its current value of $1.1million. The useful life remaining was reassessed at the time of valuation and is considered to be 20 years at this date. Determine the gain on the revaluation of office Block. a. None of the options b. $ 350,000 c. $ 340,700 d. $ 320,000
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.
At 1 January 2011 LG Co carried its office block in its financial statements at its original cost of $1 million less
a.
None of the options
b.
$ 350,000
c.
$ 340,700
d.
$ 320,000
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