Module 1: Balance day adjustments

XSIQ
*

Accounting - Depreciation

Depreciation

Depreciation is defined as the allocation of the cost of a non-current
asset over the economic life of that asset. It is charged at the end of
each accounting period. At the end of each accounting period depreciation
accumulates and it is the 'Accumulated depreciation' account, which is
posted to the Balance sheet as a deduction from the relevant non-current
asset.

When preparing to tackle the question, the following points must be
ascertained:

* the cost of the asset

* the life of the asset

* the nature of use, revenue pattern

* the residual value of the asset

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