Practice all depreciation methods including straight-line, double-declining balance, units of production, and sum-of-years digits. Covers partial years, disposals, and impairment.
Start practising now — it's free Read study guidesDepreciation is the systematic allocation of a long-lived asset's cost over its useful life. It is not a cash flow — it is an accounting entry that matches asset cost to the periods that benefit from its use. Understanding depreciation is essential for financial statement preparation, tax accounting (MACRS vs GAAP), and capital budgeting.
Straight-line produces equal expense each period. Double-declining balance is accelerated, front-loading depreciation in early years. Units of production ties expense to actual usage. Sum-of-years digits is another accelerated method. Each method produces different periodic expense but the same total over the asset's life.
Asset disposal — recording the removal of an asset from the books — and the gain or loss on disposal are closely related topics tested alongside depreciation calculations.
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