What is the depreciation charge for this machine in the financial statements of Addo ltd for the year ending 31 December 2014?
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.
Addo ltd purchased a machine for GHS30,000 on 1 January 2012 and assigned it a useful life of 12 years. On 31 March 2014 it was revalued to GHS32,000 with no change in useful life. What is the
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