Depreciation Example 1 - ACCA Financial Accounting (FA) lectures

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Free ACCA lectures for the ACCA Financial Accounting (FA) Exam

[@issiwarakavinda4056]

i'm an Engineering student and i'm doing CA also. This is very useful to me. Thank you sir.

[@harrietnyapidi2978]

Wow,very clear and straightforward lecture. Thanks lecturer

[@issiwarakavinda4056]

cupiri sir

[@dpurnimaa64]

thanks for the awesome explanation!

[@tkhue3296]

one more concept cleared .
Thanks

[@matusariwu2457]

Thank you sir

[@egzon]

Hello,
Awesome Lectures and congratulations for your work. However, I have a concern or a question, so to say. If we pay insurance for the car every year, would that be considered as a capitalized expenditure for the car or as a normal revenue expense? If it is a capital expenditure, do we have to add the insurance cost for the car (or maybe even repairment costs) to the value of the car at the end-year or should it be registered in the Financial Statement of Profit or Loss as a separate expense not related to the car value nor depreciation?

[@opentuition]

Insurance is a revenue expense :-)

[@blackm9063]

Great!!!

[@DuongNguyen-uv7te]

So as Professor said, what if it on 15th April, 8 or 9 months? for pro rata?

[@opentuition]

You could do either, but as I also said they won't play games in the exam :-)

[@khushijain4984]

after deducting depreciation why are not showing it in book value rather then cost??pls reply i have commented on your 3videos but you have not answer any of them :(

[@opentuition]

Our tutors do not regularly check here. If you have any questions you should ask them in the Ask the Tutor Forum on our free website - we always reply to questions there within 24 hours. On the SOFP we always show non-current assets at the book value. We keep the cost and the accumulated depreciation separate in the t-accounts because we are required to show the breakdown of the book value (i.e. cost less depreciation) with the SOFP.

[@wadew6300]

we assume the car's useful life is 5 years, what about after 5 years we are still using the car?

[@opentuition]

Then we stop depreciating it and the carrying value is zero :-)