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What factors do you take into account in determining the amount of depreciation?
You need to consider the useful life if the asset. The risidual income you expect to get from selling it on. And whether you are using straight line or reducing balance.
What is formula for reducing balance method of depreciation?
The formula for reducing balance method of depreciation is r = 1 - (S/C)1/n. The r stands for rate of depreciation, n stands for estimated useful life of asset, S stands for residual value after the expiry of useful life, and C stands for the original cost of asset.
The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed?
Net Fixed Assets is the term used for the difference between the balance of a fixed asset account and the related accumulated depreciation.
What is the Difference between accumulated depreciation and depreciation?
Depreciation expense is a nominal account which will goin to net income at the end of term. Accumulated depreciation is a contra account with capital assets which shows up in balance sheet.
State any four methods of Depreciation?
sum of the year digit (syd), declining balance (db), double declining balance (ddb) and straight line.
What is the different between straight line method and reducing balance method result?
The straight line method calculates the depreciation of an asset for a specific period of time, while reducing balance method calculates the depreciation for a provisional rate of an asset.
How is the straight line depreciation method different from declining balance method?
Under straight line depreciation, fixed amount of depreciation is charged to every year while in declining balance method depreciation percentage remains same but depreciation is charged on remaining balance of asset due to which the amount of depreciation is different in every year.
What depreciation is used in companies regarding company cars?
Reducing balance method
What are the three formulas for depreciation?
Thre formulas for depreciation are a fixed percentage, a straight line, and a declining balance method.
What factors do you take into account in determining the amount of depreciation?
You need to consider the useful life if the asset. The risidual income you expect to get from selling it on. And whether you are using straight line or reducing balance.
State the accounting treatment for depreciation?
As expenses in the profit and loss account = according to straight line or reducing balance methods and new year - old year and subtracted from the b/s from the fixed asset****
What is formula for reducing balance method of depreciation?
The formula for reducing balance method of depreciation is r = 1 - (S/C)1/n. The r stands for rate of depreciation, n stands for estimated useful life of asset, S stands for residual value after the expiry of useful life, and C stands for the original cost of asset.
What Identify three types of depreciation policy that could be used?
The main three methods uses are Straight-Line Method Declining Balance Method Double Declining Balance Method The Straight Line Method provides the same amount of depreciation for each year of the fixed assets life. The Declining Balance Method involves applying the depreciation rate (%) against the depreciated balance of the fixed asset each year for the life of the asset. The Double Declining Balance Method is similar to Straight-Line Method on steroids. It's also similar to the Declining Balance Method as it too uses the undepreciated balance of the fixed asset each year, however the depreciation rate is double that of Straight-Line. For example. If straight-line has a declining balance rate of 15% annually, double declining will be just what it says DOUBLE 30% Let me give you fast explanation of these three with a short example. Say you have a $10,000 fixed asset that you want to depreciate fully over the next five years with no salvage (or residual) value. Straight line method the depreciation would be $2,000 every year for 5 years, this would not change. Declining Balance however would change, the first year of depreciation would be $3,000. The second year would be based on the depreciated amount of the fixed asset or ($10,000 - $3,000 = $7,000) we then figure the depreciation on $7,000 to get $2,100. This continues until the asset is fully depreciated. Double Declining uses a combination of both, the first year of depreciation would literally be double what straight line uses making this one $4,000. The next years depreciation is figured by using the balance of the fixed asset or ($10,000 - $4,000 = $6, 000) giving us a depreciation of $2,400. This cycle also continues until the asset is fully depreciated.
The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed?
Net Fixed Assets is the term used for the difference between the balance of a fixed asset account and the related accumulated depreciation.
What is the Difference between accumulated depreciation and depreciation?
Depreciation expense is a nominal account which will goin to net income at the end of term. Accumulated depreciation is a contra account with capital assets which shows up in balance sheet.
What is the normal balance of accumulated depreciation?
the normal balance of accumulated depreciation is "credit"
What are the advantages of reducing balance method of depreciation?
Main advantage of using reducing balance method is that it uses the high value at start of life of asset while low value in later years when asset is not working at 100% capacity.
