On March 1, 2021, Bergs Corp. carried out an impairment review of its famous brand. The brand purchased on June 1, 2017, at 40 million is estimated to have a 10-year useful life. The review meanwhile indicated that the brand had a value in use of 18 million and a revised remaining useful life of 5 years. On the same day, the review results were issued, Bergs Corp. received an offer of 21 million from Knowie Inc. to purchase the brand.
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.
On March 1, 2021, Bergs Corp. carried out an impairment review of its famous brand. The brand purchased on June 1, 2017, at 40 million is estimated to have a 10-year useful life. The review meanwhile indicated that the brand had a value in use of 18 million and a revised remaining useful life of 5 years. On the same day, the review results were issued, Bergs Corp. received an offer of 21 million from Knowie Inc. to purchase the brand.
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