Straight Line and Reducing Balance Methods of Depreciation
Financial Accounting SSS1 Third Term
WEEK 7
Straight Line and Reducing Balance Methods of Depreciation
Performance Objectives
- Straight Line method
Content
This method makes provision for an equal amount to be charged as depreciation for each year of useful life. It is calculated by thus; cost of asset less residual value divided by the number estimated as the useful life span. It is said to be the easiest to calculate and consists of depreciating the value of an asset in equal instalments over the cost of its useful life. In order to calculate straight-line depreciation, you’ll need the following information:
- The asset’s initial cost
- The salvage value (It’s estimated value at the end of its useful life)
- The useful lifespan, in years
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- Preparation of Bank Reconciliation Account
- Preparation of Bank Reconciliation when there is Bank Overdraft
- End of Year Adjustments in Profit and Loss Account
- Provision for bad Debt and Provision for Discount Allowed and Received
- Bad Debts Recovered
- Depletion of Fixed Assets
- Straight Line and Reducing Balance Methods of Depreciation
- Treatment of Depreciation in Profit and Loss Accounts and Balance Sheet
- Chapters 8
- Category SSS1
- Author ClassNotes Edu
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