Fixed Assets & Depreciation At 31 July 20X6, Helios International had non-current assets which had cost $310,000. At the same date, the accumulated depreciation on the assets was $120,000. The company had not disposed of any non-current assets during the year to 31 July 20X7, but acquired an asset at a cost of $79,200 on 1 January 20X7. Helios International depreciates non-current assets at a rate of 25% per annum. What is the company’s depreciation charge for the year to 31 July 20X7 using: The straight-line method
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.
Fixed Assets &
At 31 July 20X6, Helios International had non-current assets which had cost $310,000. At the same date, the
Helios International depreciates non-current assets at a rate of 25% per annum.
What is the company’s depreciation charge for the year to 31 July 20X7 using:
- The straight-line method
- The
reducing balance method
Assume that depreciation is charged from the first year of acquisition.
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