What value should be recorded in the statement of financial position as at 31 September 2015 under Property, Plant & Equipment in respect of this machinery?
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.
Q8
Msibi Limited purchased machinery at R500 000 on 30 June 2013. It is the company’s policy to
The following details were provided by the company’s financial director:
- Value in use of the machinery in its state now is R250 000
- The fair value of the machinery reference to the market is R258 000
- Selling this asset will cost the company R10 000
What value should be recorded in the
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