Depreciation and Disposal of NCA

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Description and Tags

Accounting

11th

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4 Terms

1
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Define ‘depreciation’

The allocation of the cost of a non-current asset over its useful life. It recognises the revenue earning capacity of the non-current asset.

2
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Straight line method of depreciation

Historical cost - residual value / life

OR

Historical cost x %charge

3
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Reducing balance method of depreciation

(Historical cost - accumulated depreciation) x %charge

4
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Calculate the annual depreciation rate

Depreciation expense / historical cost