depreciation

[99.95]

depreciation expense is considered relevant....

Relevance states that all information that is likely to affect decision making must be included in financial reports. Depreciation expense is an ongoing process to estimate how much value is lost on the NCA therefore this would be materially significant and likely to affect decision making.

depreciation expense maynot be considered reliable.

Reliability states that financial reports are to be free of error or bias therefore all information must be be drawn from source documents. Depreciation is an estimation of how much value the NCA loses over time, therefore depreciation expense may not be considered reliable.


is this correct? what would i get out of 4 marks

[Stormer]

Depends if they specifically need the free from bias part and the ensures profit is accurate for the first one.

[99.95]

Depends if they specifically need the free from bias part and the ensures profit is accurate for the first one.

what would u give it out of 4

[Stormer]

4, i'm feeling nice.

[99.95]

4, i'm feeling nice.

thanks im trying to calculate my score... so far already lost 10 marks and still got section 2 to go....

[LFTM]

i put that it was relevant so an accurate profit can be determined and some other stuff which i cant remember.

And the reliability question.
I put depreciation expense involves estimations. The useful life and residual value are estimates, there is no source document to support this, hence unreliable.

[Akirus]

4, i'm feeling nice.

Four?

He didn't mention how depreciation enhances reliability in a concise manner (i.e. references to allocation over useful life, matching rev/exp, calculating profit, etc) and didn't include a mention of estimations and lack of substantiation for reliability.

I'd say 3 if you're lucky, possibly 2. Not trying to be excessively harsh, it's just better not to get your hopes too high.

[Stormer]

Yeah, you're not a nice person.

He did mention estimations for reliability though

[Akirus]

Yeah, you're not a nice person.

He did mention estimations for reliability though

Honest assessment is nicer than pity marking ;p

Ah, you're right. I guess you might get a mark for that, but I wouldn't be surprised if you got penalized for lack of detail (specifically, what estimations are inherent in straight-line depreciation?).

[Keyzer]

I said that depreciation is relevant as its omission would overstate assets, amongst other things.

[Syncness]

Ensures reliability and reports are free from bias as the owner can make up their own depreciation expense (by adjusting residue value and lifetime) and this will overstate assets and understate expenses.