03 01 04 Depreciation of Non current assets

Question 1

What is depreciable amount?

Answer 1

The cost of an asset less the residual value

Question 2

What is residual value?

Answer 2

The amount an asset is expected to be sold for at the end of its useful life (Scap value)

Question 3

What is useful life?

Answer 3

The period of time the business expects to make use of the asset

Question 4

What is carrying amount?

Answer 4

The value at which the the asset is shown in the SOFP, calculated at the cost of the asset less the accumulated depreciation

Question 5

What is the formula for straight line depreciation?

Answer 5

Depreciation = Cost - Residual Value

Question 6

What is the formula for straight line depreciation?

Answer 6

Depreciation = Cost - Residual Value

Question 7

What is the formula for straight line depreciation?

Depreciation =

Answer 7

Cost - Residual Value
________________
Useful Life (Years)

Question 8

What is the formula for the Diminishing Balance depreciation method?

Depreciation =

Answer 8

Depreciation Rate (%) x Carrying Amount

Question 9

What is the formula for the units of production depreciation method?

Depreciation =

Answer 9

Number of units produced
____________________ x (Cost - Residual Value)
Life in number of units

Question 10

What is the double entry for accounting for depreciation?

Answer 10

Depreciation Charges (SPL) - Debit
Non Current Asset Accumulated Depreciation (SOFP) - Credit