Lexes LLC bought an equipment on the 1st January 2015 at a cost of OMR 800,000. It is being depreciated over a period of 20 years as per straight line basis. In the year 2018 the company decided to use revaluation model to value its equipment. The market value as on 31st December 2018 as per professional experts was OMR 580,000. Which of the following statement is correct with reference to above situation? a- The value of equipment at the end of 31st December 2020 shall be 507,500. b- None of them c- There is a revaluation gain at the end of year 2018 d- The accumulated depreciation until 31st December 2020 on equipment shall be OMR 240,000.
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.
Lexes LLC bought an equipment on the 1st January 2015 at a cost of OMR 800,000. It is being
a- The value of equipment at the end of 31st December 2020 shall be 507,500.
b- None of them
c- There is a revaluation gain at the end of year 2018
d- The
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