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Sir, in a depreciation question, the cost of the asset was 15,000 and the maintenance agreement for 3 years is 450. Now I know that maintenance is generally not capitalized but this is for 3 years so shouldn’t we depreciate the asset of 15,450?
The maintenance is treated as an expense of $150 a year for the three years.
The whole 450 will be debited to the expense account in the first year. At the end of the year there is a prepayment of 300, so only 15 is charged to the SOPL in the first year.
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