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Depreciation, Disposal of non-current assets - Coggle Diagram
Depreciation
Diminishing Line Method
A uniform rate of depreciation is applied to the carrying amount or the written down value (WDV) of the asset
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Straight Line Method -
Each accounting period is allocated a uniform portion of the cost less the residual value, of the non-current asset
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Original cost of the asset (including capitalised expense, but excluding GST)
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Depreciation is the allocation of the depreciable amount of an asset over its useful life. The term is usually used in relation to physical assets
Depreciable amount is the cost of the depreciable asset less the net amount expected to be recovered on disposal of the asset at the end of its useful life
Many assets, particularly those of a mechanical and electrical nature, diminish in worth as a result of wear and tear
In a highly technical world, new inventions may make existing equipment obsolete before the end of its useful life
Once the amount of depreciation has been determined using the most suitable method, an entry must be made in the accounting records.
The entry is only recorded at the end of the accounting period as a balance day adjustment or when the asset is sold.
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