# Case study - Depreciation

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• Study Notes

### Diploma in Business Management & Entrepreneurship - Case study - Depreciation

• Topic Reviews
United States of America 09 April 2017
Tashika B.

The case study is very interesting.

Turkey 09 April 2017
BabaJide Martins F.

The accumulated depreciation represents the amount of the cost of an asset allocated as an expense added up over a number of accounting periods.

Equatorial Guinea 09 April 2017
Alice B.

Please can some one tell me if there are two ways of calculating depreciation under the straight line method because on previous topic an example was given and after using this method I got the result of the diminishing balance.

South Africa 09 April 2017
Morne V.

information about diminishing and straight line depreciation method through illustration is clearly given.

Nigeria 09 April 2017
Sunday O.

Case study - Depreciation

Philippines 09 April 2017
Roselyn S.

Thank you it helps to my further understanding..

Uganda 09 April 2017
Odongo M.

Accounting -> Case study - Depreciation Case study - Depreciation Example A Pizza Oven is bought on 30 September 2001 for \$10 000. It costs a further \$5000 to install. The residual value is estimated at \$3000 and the estimated life is 6 years. Required: calculate depreciation for the year ended 30.6.2002 and 30.6.2003 using both the straight line method and the diminishing balance (25% per annum) present these calculations in the general journal show the affect on the Profit and Loss statement (extract provided) show how an extract may appear in the balance sheet Straight line Profit and Loss for year ended 30.6.2002 \$ \$ Sales 8 000 less Expenses 4 000 + depreciation of pizza oven Total expenses Net profit Straight line Profit and Loss for year ended 30.6.2003 \$ \$ Sales 8 000 less Expenses 4 000 + depreciation of pizza oven Total expenses Net profit Diminishing balance Profit and Loss for year ended 30.6.2002 \$ \$ Sales 8 000 less Expenses 4 000 + depreciation of pizza oven Total expenses Net profit Diminishing balance Profit and Loss for year ended 30.6.2003 \$ \$ Sales 8 000 less Expenses 4 000 + depreciation of pizza oven Total expenses Net profit A related theory question would ask students to explain the relative effects on profit of the selection of the depreciation method. View the word document for solution to Case study - Depreciation

Uganda 08 April 2017
Saul K.

great

Nepal 08 April 2017
Manish K.

information about diminishing and straight line depreciation method through illustration is clearly given.

Nigeria 08 April 2017

understood

• Text Version

### Diploma in Business Management & Entrepreneurship - Case study - Depreciation

Accounting - Case study - Depreciation

Case study - Depreciation

Example

A Pizza Oven is bought on 30 September 2001 for \$10 000. It costs a
further \$5000 to install. The residual value is estimated at \$3000 and the
estimated life is 6 years.

Required:

* calculate depreciation for the year ended 30.6.2002 and 30.6.2003 using
both the straight line method and the diminishing balance (25% per annum)

* present these calculations in the general journal

* show the affect on the Profit and Loss statement (extract provided)

* show how an extract may appear in the balance sheet

Straight line

Profit and Loss for year ended 30.6.2002

\$
\$

Sales

8 000

less Expenses
4 000

+ depreciation of pizza oven

Total expenses

Net profit

Straight line

Profit and Loss for year ended 30.6.2003

\$
\$

Sales

8 000

less Expenses
4 000

+ depreciation of pizza oven

Total expenses

Net profit

Diminishing balance

Profit and Loss for year ended 30.6.2002

\$
\$

Sales

8 000

less Expenses
4 000

+ depreciation of pizza oven

Total expenses

Net profit

Diminishing balance

Profit and Loss for year ended 30.6.2003

\$
\$

Sales

8 000

less Expenses
4 000

+ depreciation of pizza oven

Total expenses

Net profit

A related theory question would ask students to explain the relative
effects on profit of the selection of the depreciation method.

View the word document for solution to Case study - Depreciation

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