Accounting Treatment of Depreciation

The video tutorial covers the concept of depreciation, focusing on the written down value (WDV) method. It explains how to calculate depreciation for a machine purchased by a company, including handling asset disposal and new purchases. The tutorial emphasizes the importance of noting key dates and provides a step-by-step guide to preparing a machinery ledger account over four accounting years. It also highlights common mistakes and offers tips for accurate calculations.

What is the total cost of the machine purchased on 1st July, 2008, including installation charges?

Explain the written down value method of calculating depreciation.

What important dates should be noted when calculating depreciation for the machinery?

How is the profit or loss from the sale of the machine calculated?

What entries need to be made in the machinery account at the end of the accounting year?

Describe the process of charging depreciation on the new machine acquired on 4th December, 2011.

What should be done with the balance at the end of the year in the machinery ledger?