accounting and finance's key terms

Cancelled

accounting & finance's basic and advance key term will help a student to understand these subjects:

How to Calculate Depreciation

Depreciation expense is calculated utilizing either a straight line depreciation method or an accelerated depreciation method. The straight line method calculates depreciation by spreading the cost evenly over the life of the fixed asset. Accelerated depreciation methods such as declining balance and sum of years digits calculate depreciation by expensing a large part of the cost at the beginning of the life of the fixed asset.

The required variables for calculating depreciation are the cost and the expected life of the fixed asset. Salvage value may also be considered. Examples of depreciation calculations for both straight line and accelerated methods are provided below.

Straight Line Depreciation Method

The straight line depreciation method divides the cost by the life.

SL = Cost / Life

Example: A desk is purchased for $487.65. The expected life is 5 years. Calculate the annual depreciation as follows:

[url removed, login to view] / 5 = [url removed, login to view]

Each year for 5 years $[url removed, login to view] would be expensed.

What if there is a salvage value?

Declining Balance Depreciation Method

The declining balance depreciation method uses the depreciable basis of an asset multiplied by a factor based on the life of the asset. The depreciable basis of the asset is the book value of the fixed asset -- cost less accumulated depreciation.

The factor is the percentage of the asset that would be depreciated each year under straight line depreciation times the accelerator. For example, an asset with a four year life would have 25% of the cost depreciated each year. Using double declining balance or 200%, which is the most common, would mean that depreciation expense in the first year would be twice that or 50%. So to calculate the depreciation expense each year the depreciable basis would be multiplied by 50%.

Example: A copy machine is purchased for $3,217.89. The expected life is 4 years. Using double declining balance the depreciation would be calculated as follows:

factor = 2 * (1/4) = [url removed, login to view]

Year Depreciable

Basis Depreciation

Calculation Depreciation

Expense Accumulated

Depreciation

1 3,[url removed, login to view] 3,[url removed, login to view] * 0.5 1,[url removed, login to view] 1,[url removed, login to view]

2 1,[url removed, login to view] 1,[url removed, login to view] * 0.5 [url removed, login to view] 2,[url removed, login to view]

3 [url removed, login to view] [url removed, login to view] * 0.5 [url removed, login to view] 2,[url removed, login to view]

4 [url removed, login to view] [url removed, login to view] * 0.5 [url removed, login to view] 3,[url removed, login to view]

Skills: Article Rewriting, Articles

See more: subjects required for accounting, subjects in accounting, salvage value in accounting, on line accounting, help line no of accounting, expense in accounting, depreciation in accounting, cost accounting 2, basis in accounting, balance in accounting, articles on accounting, accounting book, accounting as, accounting accounting, accounting key term, what is accounting cost, accounting cost, accounting finance required, sl, finance\, finance c, finance and accounting, finance accounting, finance & accounting, depreciation

About the Employer:
( 0 reviews ) Pakistan

Project ID: #1740706

2 freelancers are bidding on average $18/hour for this job

luxluxlux

Hello, I am very much interested in this want know more about this. Regards

$21 USD / hour
(0 Reviews)
0.0
mureithi17

Hi. I am a finance student and very interested in your project. I however don't fully understand what exactly you want done. Would you mind clarifying please?

$15 USD / hour
(0 Reviews)
0.0