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Depreciation
Depreciation
SLIDESMANIA.COM
It is defined as the
systematic allocation
of the depreciable
amount of an asset
over the useful life.
SLIDESMANIA.COM
Reminder!
Kinds of Depreciation:
Physical Depreciation is related to Depreciation Method
Depreciation is an the depreciable asset’s wear and tear
expense. and deterioration over a period. It shall reflect the pattern
It may be part of the Functional or Economic Depreciation in which future economic
benefits from the asset are
cost of goods arises from inadequacy, expected to be consumed
manufactured or an supersession and obsolescence. by the entity.
operating expense.
PFRS 5, paragraph 25,
provides that if the Factors of Depreciation:
Such change in
Depreciable Amount or depreciable cost is the cost of
asset is classified as an asset or other amount substituted for cost, less
depreciation method shall
be accounted for as
held for sale the residual value change in accounting
depreciation shall be Residual Value is the estimated net amount currently estimate.
obtainable if the asset is the end of the useful life.
discontinued.
SLIDESMANIA.COM
100,000
COMPOSITE AND GROUP METHOD
ASSET COST RESIDUAL DEPRECIABLE USEFUL LIFE IN ANNUAL
VALUE AMOUNT YEARS DEPRECIATION