Depreciation Process in Advanced Financial Accounting

Running Head: Advanced financial accounting
1
Project Report: Advanced financial accounting

Advanced financial accounting 2
Contents
Introduction:.....................................................................................................................3
Depreciation definition:....................................................................................................3
Required information:.......................................................................................................3
Date placed in services:................................................................................................3
Acquisition value:.........................................................................................................4
Salvage value:...............................................................................................................4
Estimated useful life:....................................................................................................4
Depreciation method:....................................................................................................4
Conclusion:.......................................................................................................................5
References.........................................................................................................................6
Appendix...........................................................................................................................7

Advanced financial accounting 3
Introduction:
The report concentrates on the depreciation process. It evaluates that what are the main
information of the depreciation which is required to calculate the deprecation in a newly
formed company.
Depreciation definition:
Depreciation is apportionment of cost of a fixed asset in a particular time period as an
alternative of deducting entire expenses from the purchase of the company. it is deductable
form the total assets of the company in such a manner that after a period of time, the assets
value become zero.
Depreciation of an asset could be calculated in a business through double declining
balance, sum of the year method, accelerated depreciation, straight line method, written down
value etc. In a new business, an accountant must evaluate the method on the basis of the
assets. The most common depreciation method is straight line method (Kang and Zhao,
2010).
Required information:
To charge the depreciation amount in a business, following information are required to
be calculated:
Date placed in services:
In a new business, an asset’s acquisition date and it’s establish date is important. The
establish day is a measure to calculate the depreciation amount of the company for that
particular year. Such as, if ABC limited, a new company has acquired the new machinery on
1st June 2018 and the establishment date of the new machinery is 15th June 2018. The
company closes its books on 31st Dec than the total depreciation time of the machinery would
be calculated from 15th June 2018 to 31st Dec.