On 1 January 2018, Kyle Trading Sdn. Bhd. purchased a photocopy machine at a price of MYR 800,000. This piece of office equipment is depreciated at a rate of 15% per annum using the straight-line method. Calculate the asset’s net book value on 31st December 2020, assuming that the business closes its account on that date. Select one: A. MYR 580,000 B. MYR 580,000 C. MYR 560,000 D. MYR 240,00
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.
On 1 January 2018, Kyle Trading Sdn. Bhd. purchased a photocopy machine at a price of MYR 800,000. This piece of office equipment is
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