ch-12 Flashcards
Define amortisation
It means writing off intangible assets over their useful life
Define obsolescence
It refers to decline in the economic value of an asset to innovation or improved technique, change in taste or fashion or inadequacy of existing asset due to improved demand
Define original/historical cost
It means cost incurred to acquire an asset up to the point it is ready for use. It is the basis for depreciation
Define residual value
It is the estimated sale value of the asset at the end of its useful economic life
Define accumulated depreciation
It is the total depreciation expenses already charged as expense in different accounting periods
Define straight line method
It is a method of providing depreciation under which net cost of the asset(Historical cost-Realisable value)is written off equally over the useful life of the asset
Define Written Down Value Method
It is a method of providing depreciation under which a percentage of depreciation is applied every year on the book value
