Accounting Flashcards
Fair values
Fair values is the price received when selling an asset if it was sold at the time it was acquired by the business.
What is Non-current asset
NCA is a present economic resource controlled by the entity as a result of past events and is expected to be used by the business for a number of years and is not held for the purpose of resale.
Ethical considerations of Non-current asset
Businesses should buy locally produced non-current assets to support the Australian economy. Businesses should also make sure assets purchased are efficient in nature and have minimal impact to the environment. Make sure the non-current assets are safe for workers to use and are not dangerous.
Benefits of asset register
An asset register is a document that shows the assets that the business owns.
Benefits of asset register includes assistance for planning as it draw attention to assets approaching the end of its useful life and may require replacement. It also protects the assets as in case any of the assets gets stolen the correct records are on the asset register to assist recovery or insurance claims. Asset register assists with the calculation of depreciation as it details all the relevant information to make the calculations.
Difference between depreciation and accumulated depreciation
Accumulated depreciation is the value of a non-current asset that has been consumed over its life so far. Depreciation is the allocation of the cost of a non-current asset over its useful life. Depreciation refers to the amount consumed in the current reporting period and is recorded in the income statement while accumulated refers to the depreciation that has built up over the life of the asset so far and is reported in the balance sheet.
Depreciation is accounting equation
It is a decrease in assets (increase in accumulated dep)
No effect to liabilities
Decreases owners’ equity as decrease in net profit
