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  • New Era College Accy 102D Financial Accounting 1: Assignment 1

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    Depreciation is the systematic allocation of the cost of tangible assets over their useful lives. The accounting entries for depreciation involve debiting depreciation expense and crediting accumulated depreciation. This reduces the asset value but does not change total assets. The accounting equation, Assets = Liabilities + Equity, remains in balance as depreciation lowers both the asset and equity sides by the same amount.

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    Depreciation is the systematic allocation of the cost of tangible assets over their useful lives. The accounting entries for depreciation involve debiting depreciation expense and crediting accumulated depreciation. This reduces the asset value but does not change total assets. The accounting equation, Assets = Liabilities + Equity, remains in balance as depreciation lowers both the asset and equity sides by the same amount.

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    27 views2 pages

    New Era College Accy 102D Financial Accounting 1: Assignment 1

    Uploaded by

    JianStar 星字派
    Depreciation is the systematic allocation of the cost of tangible assets over their useful lives. The accounting entries for depreciation involve debiting depreciation expense and crediting accumulated depreciation. This reduces the asset value but does not change total assets. The accounting equation, Assets = Liabilities + Equity, remains in balance as depreciation lowers both the asset and equity sides by the same amount.

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    NEW ERA COLLEGE ACCY 102D FINANCIAL ACCOUNTING 1

    ASSIGNMENT 1
    Chai jian heng Teoh su hua Ng chai chin Chong wei xiang Kong siew jing 1230140-DBA 1230139-dba 1250106-dba 1230131-dba 1230104-dba

    (c) Define depreciation and explain how the accounting entries for depreciation affect each element of the accounting equation.
    Assets = Liabilities + Capital
    1. Depreciation is a systematic and rational process of distributing the cost of tangible assets over the life of assets the method of allocation can either be Straight line method or Reducing balance method. The businesses must depreciate these assets in accordance with IAS 16, about how and when the deduction may be taken based on what the asset is and how long it will last. 2. Deprecation can also be viewed as loss of value of an asset. For example, when the value of real estate or currency fall below its book value, ideally the asset is said to have depreciated. Its important to remember that the depreciation method should be done in accordance with the business policy, and this should be consistent from one accounting period to another. Someone to give us the journal entries for recording depreciation expense in the books of accounts 3. The equation that is the foundation of double entry accounting. The accounting equation displays that all assets are either financed by borrowing money or paying with the money of the company's shareholders. Thus, the accounting equation is: Assets = Liabilities + Shareholder Equity. The balance sheet is a complex display of this equation, showing that the total assets of a company are equal to the total of liabilities and shareholder equity. Any purchase or sale by an accounting equity has an equal effect on both sides of the equation, or offsetting effects on the same side of the equation. The accounting equation is also written as Liabilities = Assets Shareholder Equity and Shareholder Equity = Assets Liabilities.

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