Fahad Express LLC is planning to buy a vehicle for its courier business. The cost of the Vehicle is RO 16000 and the useful life is 5 years. The vehicle was depreciated using Sum of Years digit method. The balance shown in the accumulated depreciation account at the end of third year is a. RO 17333 b. RO 10667 c. RO 14667 d. RO 53333

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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.