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    Topic 6a-Balance Day Adjustment - Depreciation

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    Jamilah Edward
    This document discusses depreciation adjustments for non-current assets. It explains that trial balances may not include up-to-date expenses and revenues, so adjusting entries are needed to recognize expenses incurred and revenues earned in the appropriate periods. Depreciation is then explained as an adjusting entry to allocate the cost of non-current assets over their useful lives. Finally, it provides examples of straight-line and reducing balance depreciation methods and how depreciation expense is presented in financial statements.

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    Topic 6a-Balance Day Adjustment - Depreciation

    Uploaded by

    Jamilah Edward
    44 views15 pages
    This document discusses depreciation adjustments for non-current assets. It explains that trial balances may not include up-to-date expenses and revenues, so adjusting entries are needed to recognize expenses incurred and revenues earned in the appropriate periods. Depreciation is then explained as an adjusting entry to allocate the cost of non-current assets over their useful lives. Finally, it provides examples of straight-line and reducing balance depreciation methods and how depreciation expense is presented in financial statements.

    Original Description:

    ADJUSTMENT

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    This document discusses depreciation adjustments for non-current assets. It explains that trial balances may not include up-to-date expenses and revenues, so adjusting entries are needed to recognize expenses incurred and revenues earned in the appropriate periods. Depreciation is then explained as an adjusting entry to allocate the cost of non-current assets over their useful lives. Finally, it provides examples of straight-line and reducing balance depreciation methods and how depreciation expense is presented in financial statements.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    44 views15 pages

    Topic 6a-Balance Day Adjustment - Depreciation

    Uploaded by

    Jamilah Edward
    This document discusses depreciation adjustments for non-current assets. It explains that trial balances may not include up-to-date expenses and revenues, so adjusting entries are needed to recognize expenses incurred and revenues earned in the appropriate periods. Depreciation is then explained as an adjusting entry to allocate the cost of non-current assets over their useful lives. Finally, it provides examples of straight-line and reducing balance depreciation methods and how depreciation expense is presented in financial statements.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 15

    BALANCE DAY ADJUSTMENTS:

    DEPRECIATION

    Learning Objectives

    Introduction
    Trial balance (TB) may not contain up to
    date and complete financial statement data
    TB only records expenses that have been
    paid for the period and revenue that have
    been received during the period
    Therefore adjusting entries are required
    every time financial statement are
    prepared in order to ensure that revenues
    are recorded in the period in which they are
    earned, and expenses are recognized in the
    period in which they are incurred.

    Depreciation for Non


    Current Assets

    Assets which are expected to be


    used more than one accounting
    period
    Have a limited useful life
    Held by enterprise for use in the
    running of business

    Depreciation for
    Non Current Assets

    Causes Of
    Depreciation

    Back

    Cost of Assets
    CAPITAL
    EXP

    COST OF
    ASSETS
    REVENUE
    EXP

    Example

    Method of
    Depreciations

    Straight Line Method


    The amount of depreciation for each
    accounting period will be the same

    Annual depreciation
    = Cost Scrap value
    Estimated Useful life
    or
    = % x (Cost)

    Reducing Balance Method


    (RBM)

    Final Presentation
    Statement of Comprehensive Income
    for the year ended..
    RM
    Less: Expenses
    Depreciation expenses
    xxx

    Final
    Presentation
    Statement
    of Comprehensive Income as at
    Non-current Assets:
    Cost
    Machinery
    Motor vehicles

    xxx
    xxx

    Accumulated
    depreciation
    xxx
    xxx

    NBV
    xxx
    xxx

    Consistency
    Concept

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