The KOBE Company acquired a drilling machine on October 1,2013 at a cost of $250,000 and depreciated it at 25% per annum on a straight-line basis. On October 1,2015, $50,000 was spent on an upgrade to the machine in order to improve its efficiency and increase the inflow of economic benefits over the machine's remaining life. According to IAS 16, what depreciation expense should be recognized in profit or loss for the year ended September 30,2016?
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 KOBE Company acquired a drilling machine on October 1,2013 at a cost of $250,000 and
According to IAS 16, what depreciation expense should be recognized in profit or loss for the year ended September 30,2016?
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