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4 cards from this section. Quick, good the night before a test.
What is depreciation?
Think about how assets lose value as they are used.
How do you calculate annual cost?
Remember, total cost includes all expenses for the year.
What is the primary purpose of calculating depreciation?
Consider the function of depreciation in financial terms.
True or False: The book value decreases annually.
Think about how wear affects market value.
A company uses a loader that costs 2.5 million rupees initially. After 7 years, its annual operating cost rises to 1 million rupees with a depreciation at 30%. Calculate its current book value and whether it should be replaced.
Remember to figure the cumulative operating cost before making a decision.
If you find that replacing an old machine increases productivity significantly, yet the new machine's costs are higher annually than the cumulative cost of the old, how does your decision change?
Consider long-term gain versus short-term savings.
6 more questions in this section. Enroll free to practise them all.
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