Week 5- Irrecoverable Debts And Depreciation Flashcards
1
Q
Why might debt be regarded as irrecoverable?
A
1.the receivable is bankrupt and has insufficient funds to pays.
2.the receivable refuses to pay and it is not worth taking them to court.
3.the receivable cannot be traced.
2
Q
What is depreciation?
A
The systematic allocation of the depreciable amount of an asset over time.
3
Q
What are the causes of depreciation?
A
1.usage.
2.passage of time.
3.technological obsolescence
4
Q
What are 2 methods used to calculate depreciation?
A
1.straight line method
2.reducing balance method
5
Q
What is the straight line method?
A
Depreciation= cost- residual value/ useful economic life(in years)
6
Q
What is the reducing balance method?
A
Depreciation= depreciation rate(%) x net book value
