In the 01 July 2016, Samsung Ltd acquired the machine A by $1,502,000. Estimated useful life is 10 years, estimated residual value is $2,000. Company uses straight-line method for depreciation. From 2019, Samsung Ltd measure the machine A by the revaluation model. At 30 June 2019, machine A was revalued to $ 1,400,000. After one year, at 30 June 2020, machine A was revalued to $1,000,000. At 30 June 2021, machine A was revalued to $1,500,000
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.
In the 01 July 2016, Samsung Ltd acquired the machine A by $1,502,000. Estimated useful life is 10 years, estimated residual value is $2,000. Company uses straight-line method for
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