On the 1st of January 2014, Peck PLC purchased a building for £2m which at the time of purchase was expected to have a useful life of 39 years and zero residual value. Few years later, Peck PLC decided to revalue its property. At the time of revaluation (i.e., 1st January 2023), the surveyor's report advised that the total useful life of the building was unchanged and its value was £6.5m. What should be the annual depreciation expense that Peck PLC will disclose after the revaluation? Note that the financial year end of Peck PLC is 31st December and that the company uses the straight-line method of depreciation. O a. £21,666.67 O b. £12,666.67 O c. £16,666.67 O d. None of the above
On the 1st of January 2014, Peck PLC purchased a building for £2m which at the time of purchase was expected to have a useful life of 39 years and zero residual value. Few years later, Peck PLC decided to revalue its property. At the time of revaluation (i.e., 1st January 2023), the surveyor's report advised that the total useful life of the building was unchanged and its value was £6.5m. What should be the annual depreciation expense that Peck PLC will disclose after the revaluation? Note that the financial year end of Peck PLC is 31st December and that the company uses the straight-line method of depreciation. O a. £21,666.67 O b. £12,666.67 O c. £16,666.67 O d. None of the above
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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ideas from gpt, but please do not believe its answer.Very very grateful!
Transcribed Image Text:On the 1st of January 2014, Peck PLC purchased a building for £2m which at the time of purchase
was expected to have a useful life of 39 years and zero residual value. Few years later, Peck PLC
decided to revalue its property.
At the time of revaluation (i.e., 1st January 2023), the surveyor's report advised that the total useful
life of the building was unchanged and its value was £6.5m.
What should be the annual depreciation expense that Peck PLC will disclose after the revaluation?
Note that the financial year end of Peck PLC is 31st December and that the company uses the
straight-line method of depreciation.
O a. £21,666.67
O b. £12,666.67
O c. £16,666.67
O d. None of the above
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