Accounting AOS 3

Affect on income statement ; Depreciation expense

• Other expenses increase by $

• Net profit decreases/Increases by $

Depends on comparison

Carrying value

the original cost of an asset less its life accumulated depreciation at a given time. Its current value to the business.

Depreciation expense

The expense of depreceation over a ceratain period

Accumalated depreceation

The accumalated depreciation over the period of owning an asset

Reducing balance method

a method of depreciation that allocates more depreciation in the early years of an assets life and less depreciation in its later years

Straight line method

a method of depreciation that allocates a fixed amount of cost to each reporting period

What does ROA measure

the roa indicator measures the amount of profit a business generates as a percentage of its assets value. This tells the business whether their assets are being used efficiently to generate profit.

Fair value

the estimate of the value of a non current asset contributed to the business