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Accumulated depreciation is contra for related assets shows in balance sheet to show the reduction in actual cost of asset
Example:
if 1 asset purchased for 100 for 10 years then per year depreciation is 10 with straight line depreciation so after ten years actual cost will be nill while accumulated depreciation will be 100.
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∙ 9y ago
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Depreciation is called as notional cost why and explain?
Depreciation is called a notional cost because it cannot be measured in real terms.
How does depreciation generate cash flows for a company?
That's a difficult issue to explain on a few words.
Explain why the book value of an asset is not necessarily the market value of that asset?
It is not same as market value because book value of assets derives from its cost and deduction of depreciation, while market value varies due to market conditions. That's why it may not be same.
'Interest during construction' should always be included in the cash flow analysis since it represents a true cost. Agree or disagree explain?
As working capital the IDC should be included in Investment plus it is contracted during the construction then it should be condidered as an investment /asset subject to depreciation
Explain the difference between direct cost and indirect costs?
Direct cost are those costs which varies directly with variation in volume of products units like direct labor or direct material while indirect cost has not direct connection with volume of units of products like depreciation building rent supervisors salary etc.
Depreciation is called as notional cost why and explain?
Depreciation is called a notional cost because it cannot be measured in real terms.
Why organisations need to recognize depreciation expense in the income statement?
Explain the concept of depreciation and why organisations need to recognise deprecations expense in the Income Statement.
How does depreciation generate cash flows for a company?
That's a difficult issue to explain on a few words.
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The modified straight-line method for calculating depreciation is a variation of the straight-line method where the depreciation expense is accelerated in the early years and then slows down in the later years. This method takes into account the salvage value of the asset and spreads the depreciation expense more evenly over the useful life of the asset. It is often used when the asset's cost declines more rapidly in the early years of its useful life.
Can you explain with an example?
yes
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