9 thoughts on “Depreciation in Financial Accounting

  1. Numbers are throwing me off a bit. The first example assumes that we’ve made $20,000 after five years. But the second example assumes we’ve made $15,000 after five years. I know I must be reading it wrong but I can figure out why. Is it because in the first example years one AND two are technically considered not profitable? That would make it so both examples equal $15,000 in profit after the five years.

  2. Hi, good explanation. I have one question: what happens to the depreciation accounting after the fifth year? Do you suddenly stop depreciating it? That is of course if the truck is still in good condition and it surpassed its expected lifetime.

  3. Why is the profit of the 2nd year not 0? You had an expense of 10 in the first year you earned 5 in the same year with which you ended with a loss of 5. Now the next year you earn 5 again and your loss of 5 from last year is neglected with the 2nd year profit of 5 . Isn't this the way it should have gone ? Sorry for bad grammer

  4. Hi, could also please show how accumulated depreciation is shown in the statement of financial position and statement of profit and loss?

  5. Can I just ask, in the first example with no depreciation and the expense of truck taken out in year one, should year 2 show 0 profit as you break even? as when I look at both examples it appears that example 1 makes 20k and example 2 makes 15k. Also l=usually land isnt depreciated but if you owned land on the side of a subsiding cliff would you depreciate that?.

  6. I wish this guy was my accounting teacher haha. I don't even listen to my professors lessons, I just look him up for each chapter.

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