1- Calculate the annual depreciation for each of the building separately and justify the reasons for the given depreciation method.
2- Prepare provision for depreciation account for the year ended 31st December 2019.
1. Depreciation of hotel buildings ASH Muscat is perfect for both business and leisure pursuits. For a weekend in Muscat or staying longer, it is one of the largest and most opulent luxury hotels Muscat has to offer, with 280 stylishly appointed hotel rooms & suites, with a remarkable Arabian style interior design. As of 19 January 2019, the company has been accumulated a depreciation of OMR 12 500 for all buildings and the following details are available for your reference. Building Costin Salvage Deprecation Economic Activity Depreciation Location OMR value rate lifetime level: in method number of days occupied West-wing 20000 2000 10% or 20% 10 or 5 or 4 300 days Straight Line or 25% years Method East-wing 35000 5000 25% 15 or 7.5 or 100 or 200 Activity 5 years or 300 days Method North-wing 45000 5000 12% or 5% or 7 or 12 or 8 300 days Written 10% years down value method South-wing 25000 2000 12% or 5% or 7 or 6 or 5 300 days Sum of the 10% Years' Digit Method 41 Page years*** *Estimated total number of days for the entire economic lifetime is 1500 days. **Previously accumulated depreciation of North-wing is OMR 12000 as at 1* January 2019. ***Remaining lifetime of South-wing is 4 years. NB: "Selection is from your own choice for Deprecation rate, Economic lifetime and Activity level wherever applicable. Question 1 a) Explain the factors of depreciation for hotel buildings and justify each of these factors with case referred examples. b) Calculate the annual depreciation for each of the building separately and justify the reasons for the given depreciation method. c) Prepare provision for depreciation account for the year ended 31* December 2019. ASH Muscat is perfect for both business and leisure pursuits. For a weekend in Muscat or staying longer, it is one of the largest and most opulent luxury hotels Muscat has to offer, with 280 stylishly appointed hotel rooms & suites, with a remarkable Arabian style interior design. As of 1st January 2019, the company has been accumulated a depreciation of OMR 12 500 for all buildings and the following details are available for your reference. Building Costin Salvage Deprecation Economic Activity Depreciation Location OMR value rate lifetime level: in method number of days occupied * West-wing 20000 2000 10% or 20% 10 or 5 or 4 300 days Straight Line or 25% years Method East-wing 35000 5000 25% 15 or 7.5 or 100 or 200 5 years or 300 days Activity Method North-wing 45000** 5000 12% or 5% or 7 or 12 or 8 300 days 10% years Written down value method Sum of the Years' Digit Method South-wing 25000 2000 12% or 5% or 7 or 6 or 5 300 days 10% years*** 41 Page * Estimated total number of days for the entire economic lifetime is 1500 days. **Previously accumulated depreciation of North-wing is OMR 12000 as at 1st January 2019. ***Remaining lifetime of South-wing is 4 years. NB: 'Selection is from your own choice' for Deprecation rate, Economic lifetime and Activity level wherever applicable. 1. Depreciation of hotel buildings ASH Muscat is perfect for both business and leisure pursuits. For a weekend in Muscat or staying longer, it is one of the largest and most opulent luxury hotels Muscat has to offer, with 280 stylishly appointed hotel rooms & suites, with a remarkable Arabian style interior design. As of 19 January 2019, the company has been accumulated a depreciation of OMR 12 500 for all buildings and the following details are available for your reference. Building Costin Salvage Deprecation Economic Activity Depreciation Location OMR value rate lifetime level: in method number of days occupied West-wing 20000 2000 10% or 20% 10 or 5 or 4 300 days Straight Line or 25% years Method East-wing 35000 5000 25% 15 or 7.5 or 100 or 200 Activity 5 years or 300 days Method North-wing 45000 5000 12% or 5% or 7 or 12 or 8 300 days Written 10% years down value method South-wing 25000 2000 12% or 5% or 7 or 6 or 5 300 days Sum of the 10% Years' Digit Method 41 Page years*** *Estimated total number of days for the entire economic lifetime is 1500 days. **Previously accumulated depreciation of North-wing is OMR 12000 as at 1* January 2019. ***Remaining lifetime of South-wing is 4 years. NB: "Selection is from your own choice for Deprecation rate, Economic lifetime and Activity level wherever applicable. Question 1 a) Explain the factors of depreciation for hotel buildings and justify each of these factors with case referred examples. b) Calculate the annual depreciation for each of the building separately and justify the reasons for the given depreciation method. c) Prepare provision for depreciation account for the year ended 31* December 2019. ASH Muscat is perfect for both business and leisure pursuits. For a weekend in Muscat or staying longer, it is one of the largest and most opulent luxury hotels Muscat has to offer, with 280 stylishly appointed hotel rooms & suites, with a remarkable Arabian style interior design. As of 1st January 2019, the company has been accumulated a depreciation of OMR 12 500 for all buildings and the following details are available for your reference. Building Costin Salvage Deprecation Economic Activity Depreciation Location OMR value rate lifetime level: in method number of days occupied * West-wing 20000 2000 10% or 20% 10 or 5 or 4 300 days Straight Line or 25% years Method East-wing 35000 5000 25% 15 or 7.5 or 100 or 200 5 years or 300 days Activity Method North-wing 45000** 5000 12% or 5% or 7 or 12 or 8 300 days 10% years Written down value method Sum of the Years' Digit Method South-wing 25000 2000 12% or 5% or 7 or 6 or 5 300 days 10% years*** 41 Page * Estimated total number of days for the entire economic lifetime is 1500 days. **Previously accumulated depreciation of North-wing is OMR 12000 as at 1st January 2019. ***Remaining lifetime of South-wing is 4 years. NB: 'Selection is from your own choice' for Deprecation rate, Economic lifetime and Activity level wherever applicable
