PT. Randevu in 2011 bought a factory building for IDR 500 million, with a useful life of 20 years. The depreciation uses the straight line method. Cost and expense in 2011 are:

INTRODUCTION TO COST ACCOUNTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A	500 million and 500 million
B	500 million and 25 million
C	25 million and 500 million
D	500 million and 250 million

Explanation:

Detailed explanation-1: -Hence, The depreciation value of a building having a life of 100 years can be calculated using the Straight-line method.

Detailed explanation-2: -The formula for calculating straight line depreciation is: Straight line depreciation = (cost of the asset – estimated salvage value) ÷ estimated useful life of an asset.

Detailed explanation-3: -The formula used to calculate depreciation of property is the number of years after construction divided by the total useful age of the structure. Deducting the outcome of the formula from the selling price of the building/house will give the current price of the building.

Detailed explanation-4: -The basic journal entry for depreciation is to debit the Depreciation Expense account (which appears in the income statement) and credit the Accumulated Depreciation account (which appears in the balance sheet as a contra account that reduces the amount of fixed assets).

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