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Learning Objectives
Depreciation for
Non Current Assets
Causes Of
Depreciation
Back
Cost of Assets
CAPITAL
EXP
COST OF
ASSETS
REVENUE
EXP
Example
Method of
Depreciations
Annual depreciation
= Cost Scrap value
Estimated Useful life
or
= % x (Cost)
Depreciation- Exercise
A vehicle costs RM20,000 and has a useful life of 5
years. No residual value. Reducing balance is at
50%.
Straight line
$4,000 a year is charged for 5 years
Reducing balance (50%)
Year 1 : 20,000 x 50% = 10,000
Year 2 : (20,000 10,000) x 50% = 5,000
Year 3 : (20,000 10,000 5,000) x 50% = 2,500
Year 4 : (20,000 10,000 5,000 2,500) x 50% =
1,250
Year 5 : Remaining balance 1,250
Note that under the reducing balance method more
Disposal of Non
When a non-current
asset is Asset
disposed of , both the
Current
asset and the accumulated depreciation are
removed from the relevant ledger accounts and
posted to a disposal account:
Example:
An asset was bought for RM25,000 and accumulated
depreciation is RM16,000. It has been sold for
RM10,000.
CREDIT Non-current asset account
25,000
DEBIT Depreciation account
16,000
DEBIT Disposal account
9,000
The disposal account will now appear as follows:
DEBIT Carrying value of asset
9,000
Final Presentation
Statement of Comprehensive Income
for the year ended..
RM
Less: Expenses
Depreciation expenses
xxx
Loss on disposal
xxx
Add: other income
Profit on disposal
xxx
Final
Presentation
Statement
of Financial Position as at
Non-current Assets:
Cost
Machinery
Motor vehicles
xxx
xxx
Accumulated
depreciation
xxx
xxx
NBV
xxx
xxx
Consistency
Concept