Lec 5 - depreciation non current asset Flashcards

1
Q

what are the two ways to value NCA

A

Historical Cost Accounting

Fair Value

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2
Q

In historical accounting how are NCA valued

A

cost - aggregate/accumulated depreciation

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3
Q

what is accumulated depreciation

A

measuring loss in value of asset from the date bought to the date of SOFP total !!!

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4
Q

what is net book value /written down value/net carrying amount

A

cost - accumulated depreciation

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5
Q

when doing standard depreciation i.e percentage what 3 things do you make sure you include in statement

A

the historic cost

accuulated depreciaition total

NBV

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6
Q

What is the historic cost of an asset

A

cost when bought

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7
Q

all tangible assets except what are to be depreciated and why

A

land and property

usually go up in value

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8
Q

how do we say it when recording it

A

asset x depreciated by £A during accouting year
- recorded as an expense in the P and L Account

and say NBV INI bbalance sheet

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9
Q

how is accumulated depreciation shown - i.e. written as

A

provision for depreciation

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10
Q

depreciation methods

A

straight line

reducing balance method

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11
Q

what does straight line method assume

A

depreciated by same amount each yea throughout useful economic life

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12
Q

straight line calculation

A

historical cost - residual value

/useful economic life

or

% * the original cost

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13
Q

residual value

A

value at the end of the useful life

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14
Q

useful economic life

A

years company intends to use the asset no the amount of years it can be used for

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15
Q

reducing balance method is more

A

practical

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16
Q

wha t does reducing baalnce method think

and what does it use

A

asset dont depreciate by same amount yearly

faster depreciation in the earlier periods

uses a depreciation rate

17
Q

how do you do the reducing balance method

A

depreciate as a percentage of the net book value

18
Q

when doing the depreciation what two things to remeber

  • exclusion
  • focus
A

exclude land and buildings

only focus on assets still in the business ownership/relevant ones as the provision for depreciation shows us depreciation for all assets in use

19
Q

when presented with a depreciation problem what are the three steps

A

calc depreciation

put in expenses

go to bs to do nbv equation

put in balance sheet

20
Q

provision for depreciation is totla depreciation up to

A

the end of the last financial year - we’ve got to calculate from now on

21
Q

what dsteps to take when doing reducing baalnce and only given cost and accum depreciation

A

do cost - accum depreciation * rate

i.e NBV x % of

22
Q

when disposing a NCA when will you make a profit

A

Proceeds of sale >NBV

23
Q

when disposing a NCA when will you make a loss

A

NBV > Proceeds of sale

24
Q

if make a profit on disposal of NCCA what do we record it as

A

income in IS

25
If we make a loss on disposal of NCA what do we record it as
EXPENSE IN IS
26
ONLY CALCULATE DEPRECIATION FOR
Assets still owned by the company
27
its always NBV at the
selling point
28
when w/o NBV for the still owned what two things must you make sure account for only the still owned vehicles
cost accumulated depreciation make sure you take sold vehicle away
29
when company sells their assets what's the influence on the bank account and regardless off
increases by selling amount regardless of whether they made a profit or loss
30
!! When you are told to use reducing baalnc but havent been given an NBV yet what do you do
do striaght line method first to work out depreiatiion then from there do the reducing balance method xxx
31
when doing depreciation to make w/o useful what columns should you have
year depreciation NBV