Norman Ltd purchased a motor vehicle for $45 000 on 1 July 2015. The vehicle was expected to have a four-year life span. The financial period ends on 30 June. Assuming Norman Ltd used the reducing balance method of depreciation and a rate of 40 per cent, thedepreciation expense for the year ending 30 June 2017 is: Select one: a. $11800 b. $10800 c. $9720 d. None
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.
Norman Ltd purchased a motor vehicle for $45 000 on 1 July 2015. The vehicle was expected to have a four-year life span. The financial period ends on 30 June. Assuming Norman Ltd used the
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