Kpone purchased a machine for GHS30,000 on 1 January 2005 and assigned it a useful life of 12 years. On 31 March 2007 it was revalued to GHS32,000 with no change in useful life. What will be depreciation charge in relation to this machine in the financial statements of Kpone for the year ending of 31 December 2007?

Kpone purchased a machine for GHS30,000 on 1 January 2005 and assigned it a useful life of 12 years. On 31 March 2007 it was revalued to GHS32,000 with no change in useful life. What will be depreciation charge in relation to this machine in the financial statements of Kpone for the year ending of 31 December 2007?

Name: Kpone purchased a machine for GHS30,000on 1 January 2005 and assigned
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Description: Kpone purchased a machine for GHS30,000on 1 January 2005 and assigned it a usefullife of 12 years. On 31 March 2007 it wasrevalued to GHS32,000 with no change inuseful life. What will be depreciation chargein relation to this machine in the financia

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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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Question

Kpone purchased a machine for GHS30,000
on 1 January 2005 and assigned it a useful
life of 12 years. On 31 March 2007 it was
revalued to GHS32,000 with no change in
useful life. What will be depreciation charge
in relation to this machine in the financial
statements of Kpone for the year ending of
31 December 2007?

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