Cullumber Inc. is a publicly traded company that uses straight-line depreciation and the revaluation method. Cullumber purchased a building on May 1, 2023 for $789000. The building is expected to have a 25-year useful life with no residual value. Cullumber applies the asset adjustment method to the building at the December 31, 2025 year end. The building's fair value is $704840. What is the revaluation surplus or loss? O $10000 surplus O $2500 loss O SO O $84160 loss
Cullumber Inc. is a publicly traded company that uses straight-line depreciation and the revaluation method. Cullumber purchased a building on May 1, 2023 for $789000. The building is expected to have a 25-year useful life with no residual value. Cullumber applies the asset adjustment method to the building at the December 31, 2025 year end. The building's fair value is $704840. What is the revaluation surplus or loss? O $10000 surplus O $2500 loss O SO O $84160 loss
Chapter1: Financial Statements And Business Decisions
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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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Transcribed Image Text:Cullumber Inc. is a publicly traded company that uses straight-line depreciation and the revaluation method. Cullumber purchased a
building on May 1, 2023 for $789000. The building is expected to have a 25-year useful life with no residual value. Cullumber applies
the asset adjustment method to the building at the December 31, 2025 year end. The building's fair value is $704840. What is the
revaluation surplus or loss?
$10000 surplus
O $2500 loss
O SO
O $84160 loss
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