Methods of Auditing Construction Equipment Depreciation - Essay Example

Only on StudentShare

Extract of sample
Methods of Auditing Construction Equipment Depreciation

Methods of Calculating Depreciation The total amount of depreciation over the life of a fixed asset is computed by deducting the residual value from the total cost of the fixed asset. Some of the important techniques for calculating depreciation are given below. 1. Straight line depreciation Majority firms use straight line depreciation method as it assists the accounting department to avoid clerical complexity and make financial reporting easy. As Bragg (2002) points out, straight line depreciation method is based on the assumption that each accounting period of the asset’s life has an equal amount of depreciation (p.189). The procedures for calculating depreciation under straight line method include determination of useful life of the asset in years, determination of salvage value of the asset, deduction of the estimated salvage value from the purchase price of the asset, and finally substitution of identified valued into the equation. 2. Reducing balance method Under this method, a high annual depreciation is charged in the early years of an asset’s life and the charged annual depreciation progressively diminishes as the asset ages. To record this pattern of depreciation, an annual depreciation is charged as a fixed percentage of the written down value of the asset. ...
Download paper


Methods of Auditing Construction Equipment Depreciation (Add (Add (Add Date) Methods of Auditing Construction Equipment Depreciation Introduction It is necessary for business concerns to record the consumption of fixed assets over time for the purpose of reflecting their reducing value and thereby analyzing actual state of affairs of the organization…
Author : mallie86

Related Essays

Banking Regulation in the United States
25 pages (6275 words) Research Paper
Explaining The Process Of Portfolio Management For Stock Funds Performance
24 pages (6024 words) Research Paper
Auditing Exercise for Property Plant and Equipment
3 pages (753 words) Assignment
3 pages (753 words) Essay
The usage of accounting numbers in management compensation contracts
3 pages (753 words) Assignment
7 pages (1757 words) Case Study
8 pages (2008 words) Essay
6 pages (1506 words) Assignment
4 pages (1004 words) Essay
6 pages (1506 words) Essay
Job Costing
3 pages (753 words) Essay
Got a tricky question? Receive an answer from students like you! Try us!