Assessnent 1 - Task 1 D

Hi Vicki92,
This is a tricky one and my Distance Learning Tutor said to always find the difference in periods

4,016 – 3,633 = 383 Cost

409 – 322 = 87 Accumulated depreciation

Then;

383 – 87 = 296 Disposal

And finally;

Profit on disposal 66 – Depreciation 50 = 16

So 296 + 16 = 312

The difference in periods gives the numbers to calculate the answer and treatment of depreciation is being tested.

I found a fairly good description on google, but please share if any others have more clear descriptions

Since the asset is part of normal business operations, depreciation is considered an operating expense. However, depreciation is one of the few expenses for which there is no associated outgoing cash flow. ... Thus, depreciation is a non-cash component of operating expenses