Ch 3 · Depreciation Accounting

5 concept points · 4 formulas · 4 exam-critical points.

📘 Core concepts

• 1Depreciation: systematic allocation of depreciable amount of an asset over its useful life.
• 2Causes: wear and tear, obsolescence, efflux of time, accidents.
• 3Methods: Straight Line Method (SLM) and Written Down Value (WDV).
• 4AS-10 (PPE): depreciation reviewed at each year-end; useful life and residual value re-estimated.
• 5Change in method is a change in accounting estimate (prospective effect).