Depreciation!!!!

jackiepowell
jackiepowell Registered Posts: 72 Regular contributor ⭐
Depreciation is awful!!! I have just come out of my skills test early as i am stuck on journals for it!!
Is anyone out there having the same problem or is it just me?

Help and advice on how to master all kinds of depreciation would be FANTASTIC...

Cheers guys

Jackie :001_smile:

Comments

  • Richard
    Richard Registered Posts: 373 Dedicated contributor 🦉
    The journals for depreciation are:

    DR the charge to the depreciation account, (this will be carried forward to the P&L account), and then CR the accumulated depreciation account. The balance of the accumulated account is the figure used on the balance sheet.

    There are two types of depreciation - straight line and reducing balance.

    Straight line is calculated on the cost of the asset, eg an asset with a cost price of £10,000 to be depreciated on a 10% straight line basis would calculate as £1000 per year.

    If it was reducing balance, the 10% is calculated on the NBV, so in year 1 the dep'n charge would be £1000, but in year 2 it would be 10% of £9,000 - therefore the charge would be £900.
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