Make entries for depreciation using straight line method and reducing balance method
Depreciation spreads the cost of a non-current asset across its useful life. You record it each year using two ledger accounts: a depreciation expense account and an accumulated depreciation account.
Formula
SLM: (Cost − Residual Value) ÷ Useful Life; RBM: Net Book Value × Depreciation Rate
Real World
EasyJet depreciates its aircraft using the straight-line method over 23 years, spreading the £100m+ purchase cost evenly so each year's profit bears a fair share of the expense.
Exam Focus
Under reducing balance, apply the rate to net book value each year — never to the original cost after year one.
Essay Framework
Use PEEL to structure every paragraph. Tap each step for guidance and an example.
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