Depreciation - Definition, Causes, Straight Line Method

560

A machine was bought for $3,000. It was expected to have a working life of five years and a scrap value of $200 at the end of that time. How much would be charged as depreciation per annum using the Straight Line method? $ ____.

straight line

Annual Depreciation = (Original Cost - Scrap Value) / Expected useful life of assets is the formula for _______ ______ method.

fixed instalment

Another name for straight line method is ____________ ________ method

expense

Depreciation is charged as an ________ in the current year to the Profit and Loss Account.

physical deterioration, obsolescence, passage of time, depletion

Fixed Assets depreciates for the following reasons: p_____ d_____ , ob__________, pa______ of _____ , de_______

15%

Given: Depreciation expense per year for a motor vehicle is $7,500 and original cost of motor vehicle is $50,000. What is the rate of depreciation per year for this motor vehicle? ___ %

320

Given: Original cost of office equipment is $3,200 and the rate of depreciation is 10% per annum using the straight line method. What is the amount of depreciation charged per year for this office equipment? $ ____

fall

In accounting, depreciation does not refer to the _____ in value of the fixed asset over time.

matching

In compliance with the _________ principle (accounting concept), the cost of using the fixed asset in a particular year (i.e. depreciation) should be charged against the revenue earned in that year to get the true profit for that year.

Original

Straight line method: Rate of Depreciation (%) X ___________ cost of Fixed Assets

service benefits

When a business purchases a fixed asset, it is actually purchasing a bundle of ________ _______ that will be provided over the length of the asset's useful life.

Depreciation

________ is the allocation of the cost of an asset over its useful life