The following balances were extracted from the trial balance of XY Co Ltd as at 31st December 2010. • Buildings (at cost) 22,500 • Accumulated depreciation buildings 6,250 • Fixture and fittings (at cost) 6,000 • Accumulated depreciation fixture and fittings 1,400 The depreciation is charged annually on the cost of fixed assets held at the end of the financial year at the following rates: • Buildings 4% per annum • Fixtures and fittings 10% per annum The totalnet book value is?
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 following balances were extracted from the
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