Non-current assets are being audited and the following factors have been discovered: Motor vehicles are depreciated at 25% pa straight line (full year charge in the year of acquisation, no charge in the year of disposal). The cost of the vehicles at the end of the period is $200.000 and the depreciation charge for the year is $50.000. Because mosts care are kept for at least 5 years the company is thinking of changing its depreciation rate for cars to %20 pa. So that the charge would become $40.000. 17. Which of the following is correct? a) Impairement of a non-current asset could be identified by recalculation b) Impairement of a non-current asset could be identified by inspection c) Impairement of a non-current asset could be identified by analytical procedures d) Impairement of a non-current asset could be identified by reperformance
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.
Non-current assets are being audited and the following factors have been discovered: Motor vehicles are depreciated at 25% pa straight line (full year charge in the year of acquisation, no charge in the year of disposal). The cost of the vehicles at the end of the period is $200.000 and the
17. Which of the following is correct?
a) Impairement of a non-current asset could be identified by recalculation
b) Impairement of a non-current asset could be identified by inspection
c) Impairement of a non-current asset could be identified by analytical procedures
d) Impairement of a non-current asset could be identified by reperformance
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