Mash Traders purchased a Vehicle during the year 1 August 2013 at cost R450 000 at 15% depreciation on Book Value Method year ending 28 February 2014. Calculate the Depreciation on the Vehicle. Select one: a. R39 375 b. R262 500 c. R67 500 d. R101 250
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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