Archive about 'Depreciation & Provision'

How To Select The Most Appropriate Depreciation Method

I just join a newly set up company. Now I need to choose a depreciation method whether it should be on a straight-line basis(SL), unit of production basis, declining/reducing balance basis or sum of digit (SD) methods? So how do I go about doing it?

Answer:
Based on your [...]

What Are Intangible Assets And How to Record them

My company owns some patents and trademarks. What type of assets are they and how do I treat them?

Assets that have no physical substance like patents, trademarks, copyrights, franchise, trade names are called Intangible Assets.

Certain salient points need to be noted:

The cost [...]

Answers to True Or False Questions On Depreciation Of Fixed Assets

Append below the answer on True Or False on questions on depreciation: 

 

ACCOUNTING FOR DEPRECIATION AND FIXED ASSETS

True

False

1.

Depreciation is a non-cash item

X

 

2.

Depreciation is calculated generally on the market value of fixed assets

 

X

3.

Depreciation should be provided only where the company can show some profit in a financial year

 

X

4.

Higher depreciation will affect Cash profit of the business

 

X

5.

Depreciation accounting [...]

True Or False Question (With Answers) On Depreciation Of Fixed Assets

Append below the following true or false questions ( with answers) on depreciation: 

 

ACCOUNTING FOR DEPRECIATION AND FIXED ASSETS

True

False

1.

Depreciation is a non-cash item

 

 

2.

Depreciation is calculated generally on the market value of fixed assets

 

 

3.

Depreciation should be provided only where the company can show some profit in a financial year

 

 

4.

Higher depreciation will affect Cash profit of the business

 

 

5.

Depreciation [...]

Listing Of Topics Under Depreciation Of Fixed Assets

Append below a listing of topics covered under the heading Depreciation Of Fixed Assets

Content Page

1.0

What is Depreciation  and the reasons to provide for depreciation

2.0

 
Methods Of Accounting for Depreciation –using Straight line basis, Reducing balance and Sum Of Digit method (Part 1of 2)
Methods of Account for Depreciation-using Revaluation method, Depreciation Sinking Fund and Depreciation Fund with [...]

Answers To Questions On Financial Mathematic On Depreciation

Append below the answers to questions on Financial Mathematic on depreciation based on straight line and reducing balance basis:

FINANCIAL MATHEMATICS
ANSWERS ON DEPRECIATION

1.

$3,600

2.

$2,375

3.

(a) 32.55% (b) $2,415.34

4.

(a) $131.53 (b) $304.83

5.

35.56%

6.

(a) 15% (b) 24.21%

CLICK HERE FOR ALL ARTICLES ON DEPRECIATION OF FIXED ASSETS

Questions On Depreciation Of Fixed Asset

Some questions for readers to practise on topic on depreciation of fixed assets based on straight-line basis and reducing or diminishing balance method:-

FINANCIAL MATHEMATICS
QUESTIONS ON DEPRECIATION

1

A firm bought a machine for $20,000 which is expected to be used for 5 years and then sold for $2,000. What is the annual amount of depreciation if the [...]

Fixed Asset Register

What is the purpose of maintaining a  Fixed Asset Register?

By maintaining a proper Fixed Asset Register, it allows a company to keep track of details of each fixed asset, ensuring control and preventing misappropriation of assets
It also keeps track of the correct value of assets, which allows for computation of depreciation and for tax and [...]

Accounting Test Question DEP No. 1 On Depreciation Of Fixed Assets

Accounting Test Question DEP No 1:

Question:
Johnson & Co, a building and construction firm, commenced trading on 1 January Year 6. During the three years to 31 December Year 8, the company bought and sold motor vehicles for use in the business as follows:

Date

Registration No

Cost  ($)

Date Of Disposal

Disposal Proceeds ($)

1 Feb Yr 6

E762

12,000

12 Apr Yr 8

6,000

4 [...]

How To Account For Disposal Of Fixed Assets Whether It is Sold For Cash Or Traded in as Part Payment For Another Asset

Accounting Treatment For Disposal Of Fixed Asset

When a fixed asset is disposed off:
The accounting entry is to :
Step 1:
Debit : Asset Disposal Account
Credit: Asset Account at Cost
The purpose of this entry is to transfer the cost of the fixed asset to the asset disposal account
Step 2:
Debit: Provision for depreciation a/c
Credit: Asset Disposal Account
The purpose of this [...]