Depreciation for Acquisition Value of the Asset- myassignmenthelp

Question: Discuss about theDepreciation for Acquisition Value of the Asset. Answer: Depreciation refers to the reduction in the cost value of the fixed assets according to the depreciation method used. The aim is to allow the provision to be made equal to the amount of cost of fixed assets so that companies does not requires to expend much to purchase the new machine. (Hussey and Ong, 2017). Things to be considered for depreciation are: Acquisition value of the asset: This value refers to the cost of the assets and paid at the time of buying the assets. There various things to be consider while determining the actual cost of acquisition of the assets such any expenditure occurred to bring the fixed to the place of operation will added to the cost of assets but any small repair and maintenance will not be added to the cost of the asset (Bebbington, Gray and Laughlin, 2001). Date when the asset is placed in the service: The date when the asset is first put to use is the starting date of depreciation. Stock resister must be maintained in order to record this data. Salvage Value: Fixed assets are recorded at the historical cost basis i.e. at their purchased value and some assets left with some value after complete depreciation has been provided this is termed as salvage value. Depreciation Method and rate: There are mainly three methods of depreciation they are: Straight line method Unit of production method Double-declining balance method It must be decided by the management that which method has to be used and how much rate of depreciation is to be applied on each asset (Bebbington, Gray and Laughlin, 2001). References Bebbington, J, Gray, R. and Laughlin, R. 2001. Financial Accounting: Practice and Principles. Cengage Learning EMEA. Hussey, R. and Ong, A. 2017. Corporate Financial Reporting. Springer.