4184741
Description
Mind Map by Ciara Mooney, updated more than 1 year ago
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Created by Ciara Mooney
over 8 years ago
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Depreciation
- What are the causes?
- Natural Usage
- Replaced by newer model
- End of useful economic life
- Passage of time
- Natural Usage
- How depreciaton is estimated
- Cost of Asset
- Estimated economic life
- Residual / Scrap Value
- Select method (SL/RB)
- Cost of Asset
- Methods of Deprecaition
- Straight Line
- Reduces asset by the SAME amount each year
- Amount charged is the SAME each year
- Straight line on graph
- Reduces asset by the SAME amount each year
- Reducing Balance
- Reduces asset by a SMALLER amount each year
- Amount charged DECREASES each year
- Downward slope on graph
- Reduces asset by a SMALLER amount each year
- Straight Line
- Why a company charges depreciation
- To write off FA over time
- Not overstate profits
- Not overstate FA on Bal
- Show a True & Fair View
- Avoid charging all costs in one year
- To write off FA over time
- Accounts Effected
- Asset Acc
- Disposal Acc
- Provision for Depr. Acc
- Asset Acc
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