1 / 9

2 nd Year Business Studies

2 nd Year Business Studies. 23 rd January 2013. Depreciation. Depreciation. Depreciation. Depreciation. €225,000. Depreciation. Depreciation is when a fixed asset goes down in value for one of the following reasons: Because it has got older Because it has been used a lot

noah
Download Presentation

2 nd Year Business Studies

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. 2nd Year Business Studies 23rd January 2013

  2. Depreciation

  3. Depreciation

  4. Depreciation

  5. Depreciation €225,000

  6. Depreciation • Depreciation is when a fixed asset goes down in value for one of the following reasons: • Because it has got older • Because it has been used a lot • Because it has gone out of date

  7. Depreciation • So what will a firm do to recognise that its fixed assets are decreasing in value? • They reduce the fixed asset value by a certain amount each year. This amount is called Depreciation • Depreciation is usually a percentage of the cost of the fixed asset

  8. Depreciation • E.g. Equipment cost €40,000. It is to be depreciated over 10 years at the rate of 10% of cost. • Step 1: €40,000 X 10% = €4,000 • This is the depreciation expense for the trading, profit & loss account • Step 2: Reduce the value of the fixed asset in the balance sheet by €4,000 • €40,000 - €4,000 = €36,000 • €36,000 is the Net Book Value (NBV)

  9. Balance Sheet

More Related