Deprecation

Question 1

Define deprecation

Answer 1

The part of a non current set that is consumed within use in the business

Question 2

What statement in deprecation found

Answer 2

Statement of profit or loss as an expense

Question 3

Name s3 causes of deprecation

Answer 3

Physical detestation - wear and tear
Time
Depletion

Question 4

What would you do in order to deprecate PREMISES

Answer 4

Building can be depreciated but land cannot so the aloe of the land and the building must be seperated

Question 5

How to calculate deprecation
Straight line method

Answer 5

1 estimated number of years
2 divide cost by number of years = deprecation

Note - minus estimated disposable value

Question 6

How to calculate deprecation using reducing balance method

Answer 6

Reduce the number by the fixed percentage

Whatever number you get reduce it again but the fixed percentage until you reach the mount of years

Question 7

What is the double entry for deprecation

Answer 7

Debit - deprecation charge
Credit - accumulated provisions for deprecation

Question 8

Outline how deprecation can be inputted in the statement of profit or loss and statement of financial position

Answer 8

SFP - non current asset no it is taken away

SPL - expenses

Question 9

What are the double entry steps involved i the disposal of a non current asset

Answer 9

Computer example

1. Move the computer to a computer disposal account
   D - computer disposal
   Cr - computer account
2. Transfer accumulated provision for deprecation to computer account
   D - accumulated …..
   C - computer disposal account
3. For the amount received for the computer
   D - bank
   C - computer disposal account
4. Find the difference between the credit and debit side, if the ddispodsal ends up on the d debit side, profit
   Credit side = loss
   ‘34