Boom has damaged materials of 2,000 units with cost of 200,000. If rework, additional cost is 20,000 to make it saleable. The sales price, if reworked, will be sold for 50,000. What is the net loss or income if the materials were reworked?
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.
Boom has damaged materials of 2,000 units with cost of 200,000. If rework, additional cost is 20,000 to make it saleable. The sales price, if reworked, will be sold for 50,000. What is the net loss or income if the materials were reworked?
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