What is the amount of depreciation to be allocated in the last year according to the prorated depreciation method for this vehicle with an economic life of 10 years?
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The cost of the 2020 model "Passat Impression 1.5 TSI ACT 150 PS 7-speed DSG" vehicle, acquired on 17.08.2020 to be used in management activities, is 300.000 TL. What is the amount of |
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Calculating asset depreciation on a pro-rata or proration basis can potentially be an issue in the first and final year of expensing. This means a company will need to calculate the breakdown of annual depreciation as well as a pro-rata depreciation and begin applying the schedule for the first month the asset goes into service. This creates assumptions about the date when the property will be placed into service and the date it will be retired.
Companies can adjust their depreciation schedules on a pro-rata basis as necessary, based on the time the asset actually goes into service. There is also some terminology called the half-year convention, mid-quarter convention, and mid-month convention. Internal Revenue Service code may dictate the type of convention a company must use depending on the asset in focus.
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