Depreciation

Depreciation

• recognition of the reduction in the value of assets
     -> effects are not necessarily irraversible
• the precautionary principle (S1 - Accounting Principles - Principle of prudence)

Provisions includes:
   - non-depreciable fixed assets (land, works of arts)
   - equity securities (bonds)
   - stocks
   - receivables (debtors, someone who owes you)

Cases

Update in provision

New customer to be provisioned

Insolvent customer (loss or reversal provision)

Partial payment

Customer will be insolvent in N

Recordings

From our cases, we have the following results:

Depreciation

• Account 68: Depreciation, amortization, impairment and provisions
• Account 49: Provisions for impairment of accounts receivable

Reversal of provision

• Account 49: Provisions for impairment of accounts receivable
• Account 78: Reversal of depreciation, amortization, impairment and provisions

New contentious customers

• Account 416: Customers - Doubtful accounts
• Account 411: Customers

Loss

• Account 65: Other operating expenses
• Account 44451: V.A.T. payable
• Account 411: Customers
• Account 416: Customers - Doubtful accounts

Depreciation of assets

Financial assets

200 investement securities at $240** each and worth now **$210 each.

• Original Unitary Price: $\$240$
• Inventory Unitary Price: $\$210$
• Original Value: $\$240 \times 200 = \$48 000$
• Inventory Value $\$210 \times 200 = \$42 000$

LOSS = $\$48 000 - \$42 000 = \$6 000$

Inventory stock

500 iPhones X at $900 each and worth now $797 each.

• Original Unitary Price: $\$900$
• Inventory Unitary Price: $\$797$
• Original Value: $\$900 \times 500 = \$450 000$
• Inventory Value $\$797 \times 500 = \$398 500$

LOSS = $\$450 000 - \$398 500 = \$51 500$