Lec 5 - depreciation non current asset Flashcards

1
Q

what are the two ways to value NCA

A

Historical Cost Accounting

Fair Value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

In historical accounting how are NCA valued

A

cost - aggregate/accumulated depreciation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

what is accumulated depreciation

A

measuring loss in value of asset from the date bought to the date of SOFP total !!!

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

what is net book value /written down value/net carrying amount

A

cost - accumulated depreciation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

when doing standard depreciation i.e percentage what 3 things do you make sure you include in statement

A

the historic cost

accuulated depreciaition total

NBV

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the historic cost of an asset

A

cost when bought

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

all tangible assets except what are to be depreciated and why

A

land and property

usually go up in value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

how do we say it when recording it

A

asset x depreciated by £A during accouting year
- recorded as an expense in the P and L Account

and say NBV INI bbalance sheet

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

how is accumulated depreciation shown - i.e. written as

A

provision for depreciation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

depreciation methods

A

straight line

reducing balance method

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

what does straight line method assume

A

depreciated by same amount each yea throughout useful economic life

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

straight line calculation

A

historical cost - residual value

/useful economic life

or

% * the original cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

residual value

A

value at the end of the useful life

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

useful economic life

A

years company intends to use the asset no the amount of years it can be used for

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

reducing balance method is more

A

practical

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

wha t does reducing baalnce method think

and what does it use

A

asset dont depreciate by same amount yearly

faster depreciation in the earlier periods

uses a depreciation rate

17
Q

how do you do the reducing balance method

A

depreciate as a percentage of the net book value

18
Q

when doing the depreciation what two things to remeber

  • exclusion
  • focus
A

exclude land and buildings

only focus on assets still in the business ownership/relevant ones as the provision for depreciation shows us depreciation for all assets in use

19
Q

when presented with a depreciation problem what are the three steps

A

calc depreciation

put in expenses

go to bs to do nbv equation

put in balance sheet

20
Q

provision for depreciation is totla depreciation up to

A

the end of the last financial year - we’ve got to calculate from now on

21
Q

what dsteps to take when doing reducing baalnce and only given cost and accum depreciation

A

do cost - accum depreciation * rate

i.e NBV x % of

22
Q

when disposing a NCA when will you make a profit

A

Proceeds of sale >NBV

23
Q

when disposing a NCA when will you make a loss

A

NBV > Proceeds of sale

24
Q

if make a profit on disposal of NCCA what do we record it as

A

income in IS

25
Q

If we make a loss on disposal of NCA what do we record it as

A

EXPENSE IN IS

26
Q

ONLY CALCULATE DEPRECIATION FOR

A

Assets still owned by the company

27
Q

its always NBV at the

A

selling point

28
Q

when w/o NBV for the still owned what two things must you make sure account for only the still owned vehicles

A

cost

accumulated depreciation

make sure you take sold vehicle away

29
Q

when company sells their assets what’s the influence on the bank account and regardless off

A

increases by selling amount

regardless of whether they made a profit or loss

30
Q

!! When you are told to use reducing baalnc but havent been given an NBV yet what do you do

A

do striaght line method first to work out depreiatiion

then from there do the reducing balance method xxx

31
Q

when doing depreciation to make w/o useful what columns should you have

A

year

depreciation

NBV