Depreciation of non-current assets - Advanced Review

In the previous level two accounting tutorials, we deliberated non-current asset (ie fixed asset) transactions related to purchase and depreciation at specific period of time. For instance, we focused on purchase of non-current assets at the beginning of the financial period and also determined the amount of depreciation at the end of either one financial period or more. This argument was appropriate at that learner’s level. However, it is not practical to purchase non-current assets at the beginning of the financial period all the time.

 

Sometimes the acquisition timing may vary such that it can be any time of the year. Similarly, the non-current asset may not stay in the business premises all the time, sometimes some or all the non-current assets may be disposed (sold out) any time of the year and lastly, the rate of depreciation may change due to change in the management policy governing the depreciation bases relied upon. Therefore, in the following lessons, we will aim at achieving some specific objectives in efforts of improving our book keeping skills

At the end of this part three, the learner will be able;

i)     To record transactions related to acquisition and disposal of non-current assets at any time of the year

ii)   To record depreciation transaction in a scenario whereby the policy of depreciation has changed.

iii) To prepare property, plant and equipment schedule