On march 10, 2023, Sweet Acacia limited sold equipment that it bought for 286800 on August 20, 2026. It was originally estimated that the equipment would have a useful life of 12 years and a residual value of 24000 at the end of that time and depreciation has been calculated on that basis. The company uses the straight line method of depreciation and prepares its financial statement under IFRS. Calculate the depreciation charges on this equipment for 2016 and 2023, and the total charge for the period from 2017 to 2022, inclusive under each of the following six assumptions for partial periods. Depreciation is calculated for the exact period of time during which the asset is owned. Depreciation is calculated for the full year on January 1 balance in the asset account. Depreciation is calculated for the full year on December 31 balance in the asset account Depreciation for a half year is charged on plant assets that are acquired or disposed of during the year. Depreciation is calculated on additions from the beginning of the month following their acquisition and on disposal to the beginning of the month following the disposal.
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 march 10, 2023, Sweet Acacia limited sold equipment that it bought for 286800 on August 20, 2026. It was originally estimated that the equipment would have a useful life of 12 years and a residual value of 24000 at the end of that time and
Calculate the depreciation charges on this equipment for 2016 and 2023, and the total charge for the period from 2017 to 2022, inclusive under each of the following six assumptions for partial periods.
Depreciation is calculated for the exact period of time during which the asset is owned.
Depreciation is calculated for the full year on January 1 balance in the asset account.
Depreciation is calculated for the full year on December 31 balance in the asset account
Depreciation for a half year is charged on plant assets that are acquired or disposed of during the year.
Depreciation is calculated on additions from the beginning of the month following their acquisition and on disposal to the beginning of the month following the disposal.
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