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Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Introduction to depreciation

• We have already explained that depreciation is the wasting away of fixed assets
• We have also explained that it is treated as an expense in the Income Statement where it should appear at least once a year
• Now we will look at the causes of depreciation
• It is […]
  

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Calculating/Estimating depreciation: The straight line method

• As already pointed out there are number of ways in which depreciation can be calculated
• The straight line method is merely one of these methods
• It is the most popular and simplest method of calculating depreciation there is
• First the cost of the asset […]
  

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Calculating/Estimating depreciation: The Revaluation Method

• When there are a few big fixed assets it is easy to:
  1. Ascertain the cost
  2. Estimate its useful life
  3. Calculate/estimate its depreciation
  4. Account for its disposal
  5. Calculate/estimate profit or loss on disposal
• For each asset because it is worth the effort
• There are times when […]
  

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Double entry for depreciation example

• Here we will assume that you have read
• The topic about the rationale behind depreciation
• The topic about the methods of calculating depreciation
• The entries required to record depreciation in the books
• If not you should click on each of the above links […]
  

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Disposal of Fixed Assets Example

• Now that we have looked at the entries required to record depreciation
• It is time to look at a simple example:

A business whose financial year ends at 31 December purchased on 1 January 20X7 a machine for $5,000. The machine was to be depreciated by ten […]