Accounting·Final accounts & financial statements · NSSCO 1.4
Depreciation of non-current assets
Narrated lesson · press play
Non-current assets slowly wear out and lose value — and accounting has a careful, honest way to record that loss. In this lesson we meet depreciation, provision for depreciation and book value, learn what causes the loss and why we must record it, master the three methods (straight line, reducing balance and revaluation) with worked N$ examples, and finally record it all in the General Journal and General Ledger.
What you'll learn in this lesson
By the end you should be able to (NSSCO Accounting 1.4):
- Explain the meaning of depreciation, provision for depreciation and book value
- Explain the effect of depreciation on non-current assets
- Explain the causes of depreciation
- Explain the reasons for depreciation (accrual/matching and prudence principles)
- Explain and distinguish between the methods of depreciation (straight line, reducing balance, revaluation)
- Calculate depreciation using the above methods at the end of the financial period
- Record depreciation of non-current assets in the General Journal and post to the General Ledger using the Depreciation (expense) and Provision for Depreciation accounts
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Ms Pieters and Mike talk through the whole topic — with the figure and working drawn live.