1. DEPREcIATION

2. depreciation
Depreciation refers to the fall in the value of fixed assets over the time

3. Methods of calculating depreciation
Straight-line method
Reducing balance method

4. Straight-line method
This is the simplest and most used of the 2 methods.
To calculate the annual rate of depreciation, 3 key variables are needed: the life expectancy of the asset, the residual value of the asset (how much it is worth at the end of its useful life) and the purchase cost of the asset.
Annual depreciation= Purchase cost
Lifespan

5. Straight-line method
Exercises on page 404, 405

6. Straight-line method
It depreciates the value of an asset by a predeterminated percentage. This percentage is used for each year.
Formula:
Net book value=Historical Cost-cumulative depreciation

7. Straight-line method
Page 406

8. Intangible Assets
Goodwill: is the value of an organization’s image and reputation. Ex: a firm that treats its workers well will be likely to see a lot of goodwill from its staff