Learn how to determine the initial depreciation schedule of software as an intangible asset, including calculation of depreciable value and accounting entries.
Extract
[...] This depreciation corresponds to the difference between the net book value (NBV) in N+1 and the market value (200,000?). Amount of depreciation = NBV - Current value = 235,000 - 200,000 = 35,000? 31/12/N+1 Account: Designation Debit Credit 6816 Depreciation provisions 35 000? 29154 Depreciation of industrial equipment 35 000? 3. Establish the new depreciation plan for the equipment for the N+2 exercise by representing the table below (round to the unit): Years Original Value Depreciable Base Depreciation of the year Cumulative Depreciation Depreciation in the balance sheet VNC N+2 400 000? [...]
[...] In-Depth Accounting Exercise Property, Plant and Equipment 1. Establish the initial depreciation schedule of the asset by reproducing the table below Years Original Value Depreciable Base Depreciation of the year Cumulative Depreciation VNC N (10 months) 400 000? 360 000? 75 000? 75 000? 325 000? N+1 400 000? 360 000? 90 000? 165 000? 235 000? N+2 400 000? 360 000? 90 000? 255 000? 145 000? N+3 400 000? 360 000? 90 000? 345 000? [...]
[...] The new depreciated base is explained by the fact that we must go from a current value (in of 200,000 to a residual value of 40,000? = 200,000 - 40,000 = 160,000? 1. Proceed to the accounting of the necessary entries as of 31/12/N+2 31/12/N+2 Account: Designation Debit Credit 6811 Depreciation provisions 80 000? 28154 Depreciation of industrial equipment 80 000? 2. Proceed to the accounting of the necessary entries as of 31/12/N+3 Depreciation accounting: 31/12/N+3 Account: Designation Debit Credit 6811 Depreciation provisions 80 000? 28154 Depreciation of industrial equipment 80 000? Reversal of depreciation as the current value is 40,000? [...]
[...] Account: Designation Debit Credit 208 Intangible Assets 240 000 203 Development Costs 240 000 4. Proceed to the accounting of the necessary accounting entries as of 31/12/N As of 31/12/N, we must account for the depreciation of the software over its expected usage period of 3 years. Annual Depreciation = ( 240,000 / 3 ) = 80,000? Since the commissioning date is 01/06/N, the depreciation as of 31/12/N will be prorated: 80 000 * = 46 666.67 Account: Designation Debit Credit 6811 Depreciation of intangible assets 46 666.67? [...]
