The accountant of Beta Company has ascertained the following information at 1 October 20X6: (1) The machine could be sold in its current condition for a gross amount of $130,000. Dismantling costs would amount to $6,000. (2) In its current condition, the machine could operate for three more years which gives it a value in use figure of $100,000. (3) Carrying amount of the Machine after depreciation and amortization is $ 85,000 What is the amount of recoverable amount associated with Beta Company’s on 1 October 20X6? a. $ 110,000 b. $ 124,000 c. None of the options d. $ 150,000
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.
The accountant of Beta Company has ascertained the following information at 1 October 20X6:
(1) The machine could be sold in its current condition for a gross amount of $130,000. Dismantling costs would amount to $6,000.
(2) In its current condition, the machine could operate for three more years which gives it a value in use figure of $100,000.
(3) Carrying amount of the Machine after
What is the amount of recoverable amount associated with Beta Company’s on 1 October 20X6?
a.
$ 110,000
b.
$ 124,000
c.
None of the options
d.
$ 150,000
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