On January 2nd, 2014 a business bought two motor vehicles for $30000 and $40000. It was decided that depreciation on both cars should be 25% per annum on cost price using the straight line method with nill scrap value. On January 1st, 2015 the vehicle purchased for $30000 was sold for $20000. Required i. Demonstrate how the accounting treatment for the disposal of non current assets will be
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 January 2nd, 2014 a business bought two motor vehicles for $30000 and $40000. It was decided that
i. Demonstrate how the accounting treatment for the disposal of non current assets will be
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