Statements and Definitions
The writing off of the cost of a non-current asset, such as machinery, over the period of its useful life.
depreciation
The method of depreciation where each accounting period is allocated a uniform portion of the cost of the asset less any residual value.
straight line method
Classification for "Depreciation on Computers"
Administrative Expenses
How many months in a year?
12
Journal for contribution of cash by owner of the business
CR Capital
The gradual writing off of the cost of an asset, such as a patent, through the passing of time.
amortisation
The method of depreciation where a uniform rate is applied in each period to the cost of the asset reduced by any accumulated depreciation.
diminishing balance method
Classification for "Computers"
Property, Plant and Equipment
Formula for straight line depreciation
(Original Cost - Residual Value) / Effective Life
GST is an abbreviation for
Goods and Services tax
The anticipated worth to the business of the asset at the end of its useful life.
residual value
Expenditure resulting in the acquisition of an asset whose life will extend over more than one accounting period.
capital expenditure
Classification for "Accumulated Depreciation on Computers"
Property, Plant and Equipment
What headings are non-current assets grouped under in the Statement of Financial Position?
Property, Plant and Equipment
Intangible assets
Other financial assets
Other
Journal for purchase of goods on credit (including GST)
Inventories DR
GST Credits Received DR
Accounts Payable Control CR
Expenditure on repairs and tyres.
expense
The accounts that may be seen on the debit side of the disposal of computers
Computers
Gain on Disposal of Non-Current Assets
Journal for Depreciation
DR Depreciation
CR Accumulated Depreciation
Classification of Patents
Intangibles
Who should record GST paid as an expense
1) Consumers
2) Businesses who are not registered for GST
Important part of the internal control over property, plant and equipment assets.
asset register
The accounts that may be seen on the credit side of the disposal of computers
Accumulated Depreciation on Computers
Cash or Accounts Receivable
Loss on Disposal of Non-Current Assets
Classification of Gain on Disposal of Non-Current Assets
Revenue
What are the five steps to record the disposal of a non-current asset?
1) Depreciate the asset for the part of the year for which the asset has been used
2) Transfer the cost of the asset to the Disposal Account
3) Transfer any depreciation that has been accumulated on the asset sold from the Accumulated Depreciation account to the Disposal Account
4) Record the disposal price of the asset in the Disposal Account
5) Determine the gain or loss on the disposal of the asset.
Sales CR
GST Collected CR
Cash at Bank DR
Cost of Sales DR
Inventories CR