Refresh or test your accounting knowledge on fixed assets re: depreciation,revaluation and disposal:
1.0 Define depreciation
2.0 What is the “depreciable amount” of a fixed asset?
3.0 Describe the method of calculating a depreciation charge under:
(a) the straight line method
(b) the reducing balance method
4.0 In the later years of an asset’s life, depreciation charges are higher if the straight line method is used than if the reducing balance method is used. True or false?
5.0 What effect does a change in an asset’s estimated useful life have on the depreciation charge?
6.0 The net book value of a fixed asset is intended to be an approximation of its market value. True or false?
7.0 How is the profit or loss on disposal of a fixed asset calculated?