Relative Sales Value Method: -- Apple Corporation purchased a track of unimproved land for $610,000. This land was improved and subdivided into building lots at an additional cost of $125,000. These Building lots were all of the same size but owing to differences in location were offered for sale at different prices as follows. Group No. of lots Price per Lot 1 21 25,000 2 13 20,000 3 9 18,000 Operating expenses for the year allocated to this project total $72,500. Lots unsold at the year-ended were as follows: Group No. of lots 1 9 2 3 3 4 INSTRUCTIONS: At the end of the fiscal year Apple Corporation instructs you to arrive at the net income realized on this operation to date.
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.
Relative Sales Value Method: -- Apple Corporation purchased a track of unimproved land for $610,000. This land was improved and subdivided into building lots at an additional cost of $125,000.
These Building lots were all of the same size but owing to differences in location were offered for sale at different prices as follows.
Group No. of lots Price per Lot
1 21 25,000
2 13 20,000
3 9 18,000
Operating expenses for the year allocated to this project total $72,500. Lots unsold at the year-ended were as follows:
Group No. of lots
1 9
2 3
3 4
INSTRUCTIONS: At the end of the fiscal year Apple Corporation instructs you to arrive at the net income realized on this operation to date.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
