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Al Hajar Electronics LLC Asset Acquisition and Depreciation On 1 st April 2 0 2 2 , Al Hajar Electronics LLC , a company based

Al Hajar Electronics LLC Asset Acquisition and Depreciation
On 1st April 2022, Al Hajar Electronics LLC, a company based in Oman specializing in retailing high-quality electronic goods, acquires a new refrigeration system for its main warehouse from CoolTech Solutions. The financial and operational details of the purchase are as follows:
OMR:
List price of the refrigeration system: 62,000
Import duty: 1,200
Delivery fees: 1,750
Installation costs: 6,500
Pre-production testing: 3,600
Purchase of a four-year service agreement with CoolTech Solutions: 5,500
Additionally, Al Hajar Electronics LLC was granted a trade discount of 15% on the initial list price of the refrigeration system and a settlement discount of 5% if payment was made within 30 days of purchase. The payment for the refrigeration system was completed on 20th April 2022.
The refrigeration system is estimated to have a useful life of 8 years with a potential salvage value of OMR 6,250 at the end of its use. The estimated usage is 70,000 cooling hours over its lifetime.
In the year 2022, Al Hajar Electronics LLC uses the refrigeration system for 900 hours. Calculate Depreciation Charges for Al Hajar Electronics LLC for 2022 and answer related questions (8 Marks Total 1 mark for each)
Using the straight-line method .
Applying the activity method based on cooling hours for 2022.
Implementing the sum-of-the-years' digits method for 2022.
Calculating using the diminishing (written down) value method for 2022.
Which Depreciation method provides the highest deduction in the final year of an asset's life?
Which depreciation method produces a constant periodic expense as an asset depreciates?
What is the difference between Depreciation for financial reporting purposes and tax purposes?
Which method provides a larger Depreciation deduction under an accelerated-cost recovery system?

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