On 31 October 2012 the carrying amount of an entity’s delivery truck was R200 000 when its recoverable amount was estimated to be R190 000. On 31 October 2013 conditions that led to the previous impairment changed it was estimated that the new recoverable amount of the delivery truck was now R205 000. How much impairment can be reversed on 31 October 2013? Select one: a. R205 000 b. R15 000 c. R5 000 d. R10 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.
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On 31 October 2012 the carrying amount of an entity’s delivery truck was R200 000 when its recoverable amount was estimated to be R190 000. On 31 October 2013 conditions that led to the previous impairment changed it was estimated that the new recoverable amount of the delivery truck was now R205 000. How much impairment can be reversed on 31 October 2013?
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