Five years ago, new 7-year leases were signed with tenants for over 80% of the space in the property. The local area has improved and two years ago the landlord invested a small fortune in upgrading the building’s common areas and exterior. How is the value of the property impacted? a) It is not impacted b) It is decreased c) It is increased Please provide an explanation and ensure accuracy. Thanks a bunch!
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Five years ago, new 7-year leases were signed with tenants for over 80% of the space in the property. The local area has improved and two years ago the landlord invested a small fortune in upgrading the building’s common areas and exterior. How is the value of the property impacted?
a) It is not impacted
b) It is decreased
c) It is increased
Please provide an explanation and ensure accuracy. Thanks a bunch!
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