accounting NCA

Historical cost

the cost of an asset when purchased, includes original price without gst and any costs relating to getting the asset ready

Fair value

used when there has been a contribution of the asset to the business without sale

Depreciation

A non current asset’s effectiveness diminishes over its useful life

part of the cost in Non current asset

Straight line

used when asset contributes evenly to revenue earning throughout its useful life

Straight line method

Historical cost - residual value / useful life

Reducing balance

Asset contributes to revenue more at the start of its useful life and less at the end

Reducing balance method

Carrying value x depreciation rate, carrying value = historical cost - accumulated depreciation

Asset turnover formula

Net sales / average total sales = cents for every dollar

Asset turnover

an efficiency indicator that measures number of time total assets generate Net sales

Return on assets formula

Net profit/ average total assets x100

Return on assets

profitability indicator that measures number of time total assets generate net profit