unit 5

cashy Registered Posts: 4 New contributor ?
i might be thick but can anyone help with group depreciation:


  • Bluewednesday
    Bluewednesday Registered Posts: 1,624
    can you be more specific, what do you want to know?
  • reddwarf
    reddwarf Registered Posts: 528
    The types of depreciation we have to understand are

    Straight Line
    Reducing Balance

    these are used but not in our syllabus,

    Units of output
    Sum of the digit

    And there are more!!!!

    Group Depreciation,

    Method for depreciating multiple-asset accounts using one rate. It is used to depreciate a collection of assets that are similar in nature and have approximately the same useful lives such as equipment. The method approximates a single unit cost procedure since the dispersion from the average is not significant. The method of computation and journal entries are basically the same as that of the Composite Depreciation method;
    Applying one depreciation rate to the entire asset. For example, in real estate the foundation and framing of a building may last over 50 years, whereas the electrical and plumbing systems have much shorter lives, say 20 years. A composite rate provides a weighted average life, perhaps 331/3 years for real estate. See also Component Depreciation;An effort to depreciate a property based on the lives of individual assets within it. For example, a building has electrical components and plumbing components that may be assigned a 20-year life, a roof with 15, and a foundation with a 50-year life. Use has diminished because the 1981 tax act and subsequent acts generally required Composite Depreciation

    Hmm wish I'd not looked into this!!
  • twinmeister
    twinmeister Registered Posts: 122 ? ? ?
    Think the key here is the words 'not in our syllabus' !
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