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Accounting for Assets and Liabilities
Quick questions on Depreciation methods explained: H2 Principles of Accounting
5short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is the straight-line method?Show answer
Straight-line charges an equal amount each year:
What is the reducing-balance method?Show answer
Reducing balance applies a fixed percentage to the carrying amount (not the cost) each year:
What is q1?Show answer
A machine costs \25\,000\, life years. Find the straight-line charge. [2 marks]
What is q2?Show answer
An asset has a carrying amount of \20\,00025\%$ reducing balance. Find this year's charge and the new carrying amount. [2 marks]
What is q3?Show answer
Explain why depreciation does not provide the cash to replace an asset. [3 marks]
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