OmanOil purchased land for RO 70,000 cash. Real estate brokers' commission was RO 17,000 and RO 5,000 was spent for removing an old building. A new building cost the company RO 50,000 and RO 4,500 for windows and lights for the building, the cost of land would be recorded at: Select one: O a. None of the answers are correct. O b. RO 87,000. O c. RO 92,000. O d. RO 85,000. O e. RO 80,000.
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.
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