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4 cards from this section. Quick, good the night before a test.
What do we call the original price paid for an asset?
It's the initial amount spent to acquire the asset.
What is salvage value?
Think about the return you might get when you sell an asset after using it.
Which of the following affects the annual depreciation expense of an asset?
Think about which factor contributes to how we assess an asset's value.
True or False: The estimated useful life of an asset is irrelevant to its depreciation calculation.
Reflect on how long an asset is used and how it impacts accounting.
A small business purchases a delivery truck for ₹500,000, forecasting its useful life to be 10 years and expecting a salvage value of ₹50,000. Calculate the annual depreciation using the straight-line method.
Don’t forget to subtract the salvage value before dividing by the useful life!
If a company decides to switch from the written down value method to the sum of the years' digits method for an asset purchased for ₹200,000, with a useful life of 5 years, calculate the first-year depreciation under the new method.
First, find the sum of the digits for the years, then apply the formula.
5 more questions in this section. Enroll free to practise them all.
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