At 30 September 2023 Sandown Ltd’s trial balance showed a brand at a cost of $30 million less accumulated amortisation brought forward at 1 October 2022 of $9 million. Amortisation is based on a 10-year useful life. An impairment review on 1 April 2023 concluded that the brand had a value in use of $12 million and a remaining useful life of three years. However, on the same date Sandown Co received an offer to purchase the brand for $15 million. What should be the carrying amount of the brand in the statement of financial position of Sandown Ltd as at 30 September 2023. (Enter your answer to the nearest $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 30 September 2023 Sandown Ltd’s
What should be the carrying amount of the brand in the statement of financial position of Sandown Ltd as at 30 September 2023. (Enter your answer to the nearest $000)
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