the depreciation in the books of the buyer is charged on
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Explanation:
Therefore, depreciation should be charged every year on the cash price of the asset acquired under hire-purchase agreement even if the ownership is not transferred.
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The depreciation in the books of the buyer is charged on the net purchase amount of the book.
Physical assets include property, plant, and equipment etc. Now it is important to calculate the proper depreciation of physical asset, means it should be assigned proper asset valuation. If this is done wrong, it can impact the overall balance sheet of the company, also the loans the company took to purchase the asset.
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