Discuss the considerations that determine the selection of a suitable average. Explain by giving one example of each case
Answers
The considerations that determine the selection of a suitable average are as follows;
Step-by-step explanation:
Scrap value can be defined as ideal value of the object after its use
Example of Scrap Value
The residual amount that the company can get if it disposes of the machinery after 8 years is: Scrap Value = 70,000 – (2000 x 8) =
Scrap value = 70,000 – 16000 = 54000. The scrap value can also be used to calculate the depreciation expense.
Depreciation cost is the % on which value of asses stop declining.
Purchase cost of 50,000 – estimated salvage value of 10,000 = Depreciable asset cost of 40,000. 1/5-year useful life = 15% depreciation rate per year.
Goods sold or purchased are the price in which buyer purchase goods from seller.
Examples include cost of material labour.
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Describe depreciation, various methods of charging depreciation
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