Calculation of depreciation
The recordings on this page show you how to calculation annual depreciation expense over 3 accounting years.
The recordings on this page show you how to calculation annual depreciation expense over 3 accounting years.
Annual depreciation = % x Net book value
Where net book value = Cost - Accumulated depreciation
(Hint: think of accumulated depreciation as all the previous years depreciation)
Note: Fraction is required if the non-current asset was not used for the entire accounting year and the question did not say "a full year's depreciation is charged in the year of purchase".
*Please note that there is a typo in the timeline in the recording. The 3rd accounting year should end 31 March 2020 (not 31 March 2019).
Annual depreciation = % x Cost
Note: Fraction is required if the non-current asset was not used for the entire accounting year and the question did not say "a full year's depreciation is charged in the year of purchase".
Annual depreciation = (Cost - Scrap value*) / Useful life
*Scrap value is also known as residual value.
Note: Fraction is required if the non-current asset was not used for the entire accounting year and the question did not say "a full year's depreciation is charged in the year of purchase".