Ham Company provided the following information at year – end: 2018 2017 Building 25 000 000 25 000 000 Accumulated depreciation 5 000 000 3 875 000 The straight – line method of depreciation is used. The residual value is10% of asset cost. What is the useful life of the building?
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.
Ham Company provided the following information at year – end:
2018 2017
Building 25 000 000 25 000 000
The straight – line method of depreciation is used. The residual value is10% of asset cost.
What is the useful life of the building?
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