Depreciation: It refers to the reduction in the monetary value of fixed tangible assets over its useful life due to its wear and tear or, obsolescence. In other words, it is the method of distributing the cost of tangible fixed assets over its estimated useful life. Disposal of Assets: Disposal is an activity of selling the worn-out assets that is no longer in need for the business, in return for some consideration. To determine: The amount of gain or loss from sale of property and equipment.

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Chapter 11, Problem 11.14BYP

Requirement – 1

To determine

Depreciation:

It refers to the reduction in the monetary value of fixed tangible assets over its useful life due to its wear and tear or, obsolescence. In other words, it is the method of distributing the cost of tangible fixed assets over its estimated useful life.

Disposal of Assets:

Disposal is an activity of selling the worn-out assets that is no longer in need for the business, in return for some consideration.

To determine: The amount of gain or loss from sale of property and equipment.

Requirement – 2

To determine

The approximate average service life of depreciable assets.

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