Doctor Accounting : Chapter 11 in Collaboration with SAA Global Education
Coming back to Depreciation. Do you know what a straight-line depreciation method is?
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Welcome to Doctor Accounting chapter eleven.
In this series, I would like to extend and share with you on Depreciation, using the Straight-line method.
Can you remember the formula, the formula is cost minus by residual value over the useful life.
Let me show you an illustration. If the cost of the asset is $20,000 and the residual value is $5,000. The useful life is 10 years.
So how would you calculate? You take the cost minus by residual value over useful life.
Cost, $20,000 minus by Residual Value, $5,000 over Useful life, 10 years. So the outcome will be $1,500.
Well done! You’ve got the answer right. So now bear in mind, that depreciation is an expense, it will appear in the P&L. And depreciation is a non-cash item. So in my Doctor Accounting Chapter twelve, i like to share with you on the reducing balance method. Thank you.