POA (updated 5 feb 09)
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don't remind me of uni please..
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Apologies; for my side, we do need the interest rate in finance lease.
But, I am not sure if we have the same definition of interest rate.
Anyway, you sounded to me like you have to win an argument kind of person.
Hrmm.. Why not I just tell u straight that my accounts/finance not as fantastic as yours and that I should fly back to UK to do my uni again? Sounds better? (",)Cheers!
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Like I have mentioned, our definition of interest rate may be different, thus leading to the discrepancy in this issue.
To mention that I should redo my uni, is just to ease off this issue and have a 'case-close'.
Just wondering, are you from NTU / NUS? -
Originally posted by maurizio13:
What level is your CFA now?
3 hours in the morning and 3 hours afternoon, siong or not?
haha i just grad from uni not long, you think leh? i OT everyday go home study, sleep.. wake up work.. :( -
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don't use this thread please.. create another one
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M13, we are preparing students for o level. please, prepare students for university in another thread. i must thank you for showing me how differently university works compared to o level. however, students in this thread dont need the knowledge for university yet.
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Originally posted by deteq:
M13, we are preparing students for o level. please, prepare students for university in another thread. i must thank you for showing me how differently university works compared to o level. however, students in this thread dont need the knowledge for university yet.
Ok. Fine. I won't help anymore.
I will remove all previous postings.
Happy?
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deteq,
I am sorry, I am not good enough, all my methods were wrong. Your method is correct.
Please continue to do whatever you are doing, you are doing very well.
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maurizo, why don't you contribute your postings to eagle's website. i think he would appreciate it even more as not a lot of postings by uni students here?
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Originally posted by maurizio13:
Ok. Fine. I won't help anymore.
I will remove all previous postings.
Happy?
actually, you helping or not does not make me happy nor sad. but i think helping by contributing university answers do not actually help.
and i must apologize for saying you were wrong previously. your answer may be correct in university, i am in no position to comment on your answers. however, its unacceptable at o level standard. my previous posts were to tell you this point, and not to critisize on your answer.i hope you understand this.
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Originally posted by maurizio13:
deteq,
I am sorry, I am not good enough, all my methods were wrong. Your method is correct.
Please continue to do whatever you are doing, you are doing very well.
kk relax~=)
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Originally posted by tinuviel07:
Depreciation
Layman's explanation: Let's say the company buy a table for $5000 and use it for 5 years. If they expensed the whole $5,000 in the first year they bought, it's like the table costs $5,000 to use for the first year, then the next 4 years is free. So a more appropriate way is to have a certain expense for each of the 5 years the table is used.
The 5 years mentioned here is known as the useful life. This will be provided in the question.
This is in line with the matching principle that you've earned - to match cost of using the fixed asset in a particular year against the revenue earned in that year to get the true profit.
If I don't use depreciation, let's say my revenue is $10K each year.
My profit for year 1 will be = $10K - $5k = $5K
Year 2 - Year 5 is $10K each. This is an understatement of the true profit in year 1 and overstatement of the true profit in year 2 - 5 because I've only used 1/5 of the table in year 1.
2 methods to calculate depreciation
1 Straight-line method
Annual depreciation = (original cost - scrap value) / no. of years of useful life
E.g. If the table costs $5,000 and the scrap value (that is at the end of the 5th year, it is expected to bring me $500 if I sold it off) and useful life is 5 years.
Annual depreciation = ($5000 - $500) / 5 = $900 per year.
Annual depreciation is constant every year.
Disadvantage of this method - it assumes that the fixed asset gives the same service or I prefer to phrase it as - it assumes we use the table for the same amount of frequency each year. For some assets, we use it more in the first few years when it's brand-new and use it less as it gets older and less efficient etc. Sometimes when business is very good, we will use it very often, while if economy is bad like now we use it less. So straight-line method may not be the most appropriate choice.
2 Reducing Balance/Diminishing Balance Method
I shan't explain this method using words but rather with an example.
Let's say a van costs $10K and I expect to sell it for $256 at the end of its life. Its useful life is 4 years, rate of depreciation = 60%
Year 1 Depreciation expense = 60% x 10K = $6K
Book value now = $10K - $6K = $4K
Year 2 Depreciation expense = 60% x $4k = $2.4K
Book value now = $4k - $2.4K = $1.6K
Year 3 Depreciation expense = 60% x $1.6K = $960
Book value now = $1.6K - $960 = $640
Year 4 Depreciation expense = 60% x $640 = $384
Book value at end of year 4 = $640 - $384 = $256. (= scrap value)
Advantage:
- Useful for assets that are most efficient in earlier years. (more truthful allocation)
- Overall expenses is more or less constant for the use of a fixed asset because the lower depreciation cost in the later years is offset by the high maintenance and repair costs.
Disadvantages:
- Fixed asset takes a long time to be written off
- In order to write-off the whole cost of the asset, the rate of depreciation has to be quite high. This will cause the book value to be lower in the earlier years and not very realistic when compared to current market value of the asset.
there is the 3rd method i think its called the revaluation method. its basically finding the market value of your product then minus from cost price to find depreciation
advantage is its the most accurate to calculate your depreciation
disadvantage is require lots of effort.
thats all i can think for now. maybe will add in later.
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if i m not wrong, another advantage would be, using this method, you can know how much assets you have at any one time of the year, not only at the end of the year.
hmmm about this.. i don't quite get this because this method gives you the current market value but as depreciation for the other 2 methods can be calculated beforehand just that you post at the end of the year, how is this an advantage for revaluation method
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Originally posted by deteq:
there is the 3rd method i think its called the revaluation method. its basically finding the market value of your product then minus from cost price to find depreciation
advantage is its the most accurate to calculate your depreciation
disadvantage is require lots of effort.
thats all i can think for now. maybe will add in later.
yup i tend to type a bit then upload in case it's gone haha.. so that's why it comes in parts
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i dont really know that advantage. but well, it means that you can asses how much you have at any point in time. not only the current market value for year end. but i not sure whether this can be advantage or not.
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bump up
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I need help with my POA Homework. I'm doing the chapter on Final Accounts with Balance-Day Adjustments.
One of my questions has this question in its additional information:
On 30 August 2007, goods which cost $2200 were stolen. No record has been made in the accounts and nocash had been received from the insurance company.
What is the double entry for this question?
I'm not sure what to debit and I'm pretty sure Purchases account should be credited.
Please help, tyvm. :D -
Originally posted by dead_decibel:
I need help with my POA Homework. I'm doing the chapter on Final Accounts with Balance-Day Adjustments.
One of my questions has this question in its additional information:
On 30 August 2007, goods which cost $2200 were stolen. No record has been made in the accounts and nocash had been received from the insurance company.
What is the double entry for this question?
I'm not sure what to debit and I'm pretty sure Purchases account should be credited.
Please help, tyvm. :D
i presume you have gotten the reply from the previous thread? -
updated in page 1
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***Assumption: Depreciation is charged in the year of disposal.
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Hey maurizio.. thanks for the ans, but I don;t quite understand it... this is what I did, but i can;'t balance it.
Dr Cash 25,000
Dr Accumulated Depreciation (22,500 + 7,500)
Cr Machine A 50,000
Dr Loss 50000(50,000 - 30,000)total of debit side is 60,000 while cr side is 50,000