What is total amount of depreciation?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- Acquisition Cost – Salvage Value.
The depreciation on fixed assets is provided to recognise the cost of the asset consumed during an accounting period since the life of such assets extends beyond single accounting year. Usually, depreciation is not provided on freehold land.
Total Amount of Depreciation = Acquisition Cost – Salvage Value (Over Life of the Asset).
Year-to-date depreciation is the accumulated depreciation from the date to which the asset is put to use till the current accounting year. Depreciation is calculated according to the policy of the organisation.