level: Depreciation
Questions and Answers List
level questions: Depreciation
| Question | Answer |
|---|---|
| What is the straight line method of depreciation? | An equal amount of depreciation is charged each year. |
| What is the Reducing balance method of depreciation? | The depreciation charge each year is a fixed percentage of the net book value at the end of the previous year. |
| What is depreciation? | To charge of the cost of a non-current asset over its useful life. |
| Net Book Value = | Asset Cost/value less depreciation |
| How is straight line depreciation calculated? | (Original Cost - Residual value) ÷ Estimated useful life |
| What is the accounting entry for charging depreciation? | Dr Depreciation Expense a/c Cr Accumulated Depreciation a/c |
| What depreciation balance will appear in the SFP? | The balance from the Accumulated Depreciation A/C will appear as a deduction from the cost of the assets. |
| What depreciation balance will appear in the SPL? | The balance from the Depreciation Expense A/C will appear as an expense. |