Depreciation – Exercises

Just to make sure that you know….

Question 1

Why we need to depreciate?

 

Question 2

What are the factors that cause the depreciation?

 

Question 3

An asset costing RM98,000 which was acquired in January 2015 was sold at the price of RM67,600 cash on November 2018. The annual depreciation rate for the said asset was 20% using a straight line method.

You are required to prepare asset a/c, depreciation a/c, accumulated depreciation a/c, disposal a/c.  You are also required to extract SOCI and SOFP for the year ending December 2017 and 2018.

 

 

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Replacement Class

Assalamualaikum,

Dear students, please be informed that, you have to attend for a class replacement on this coming Friday. The replacement class which will be held on 9th February 2018 is to replace the Christmas Day which fell on Monday 25th December 2017. So it will be like this….as for my class only…….

Affected class to attend the replacement class this Friday are….

DOM2234 Section 1, normal class time is 0800 – 0930hrs. Replacement is 0800 – 0930hrs this Friday. Same venue.

DOM2234 Section 2, normal class time is 1100 – 1230hrs. Replacement is 1100 – 12930hrs this Friday. Same venue.

DATE: 9 FEBRUARY 2018 (FRIDAY)

 

Slot 1.5 hours Slot 1 Slot 2 Slot 3
Class Time 8.00am – 9.30am 9.30am – 11.00am 11.00am – 12.30pm
Replacement Time 8.00am – 9.30am 9.30am – 11.00am 11.00am – 12.30pm

 

BUS2231 Section 2, normal class time is 1530 – 1500hrs. Replacement is 1100 – 1230hrs on 23rd February 2018 (Friday). Same venue.

DATE: 23 FEBRUARY 2018 (FRIDAY)

 

Slot 1.5 hours Slot 1 Slot 2 Slot 3
Class Time 12.30pm – 2.00pm 2.00pm – 3.30pm 3.30pm – 5.00pm
Replacement Time 8.00am – 9.30am 9.30am – 11.00am 11.00am – 12.30pm

Ok see ya!

Depreciation – Part 4

Reducing balance method

I almost forgot that I haven’t finish the depreciation calculation for the above method. How about I use the previous example for this method as we can see clearly the difference between them. Just wait….

A machine cost RM80,000 acquired in 2016. The depreciation is 20% per annum using reducing balance method.

Depreciation - calculation 4

As you can see, the calculation doesn’t change much. It just that, the similarities of between the straight line and reducing balance is that, they have same depreciation figure for the first year. This is because, the cost will be the base for the calculation. Therefore, both method same the same figure ONLY for the first year.

As for the second year, the reducing balance method, takes the balance figure (Net book value), using it as the base. By using the net book value each year as the base to calculate the yearly depreciation, the annual depreciation will continue to decrease. Therefore, the expenses to be reported in the SOCI will be smaller and smaller every year. And also, the profit looks good too.

But…..

It all depends on the company policy and also the advice from the auditor. Companies always use the normal practice according to the industry. Whenever they want to change the method of depreciation, they have to ask for and advise from the auditor and they better have such a strong reason on why they want to change method.

Try to compare between those two. What would be the net profit in year 5, given the gross profit of RM50,000. Answers? Tell me in class.

 

Food for thought….

Alhamdulillah, as I walked into the class, I saw a small plastic on the table which I thought it was a rubbish that was left on the table before the students went back for holidays. My negative assumption vanished when I realised that, there were three pieces of kuih that I didn’t know its name was wrapped in the plastics. I knew, the kuih were given by my students. This is not the first time. I received many gifts from students, sometimes kuih, biscuits, a can of red bull, coffee or even starbucks!

I’m not asking all of these, but the sense of giving is what I admired most. Of course I like to receive presents. Everybody like to have one. Alhamdulillah, I’ve been chosen to be one of the recipient. I must say, my students are good, they value the knowledge given and they know that the contribution they are making towards their parents, lecturers and doing good to other people will somehow be rewarded by Allah swt. Everyday, I always thinking of new ways on how to teach my students, attract them to like my subject, even if I sort of punish them for not doing their assignments of homework, still, my responsibility is to EDUCATE.. Again, I wish to thank my students who always supporting me, giving e small presents (mostly drinks). I pray for my students to be success in their life.

I’m not writing this to ask more but I’m writing this just to tell that there is still good people out there…..