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)
Provision = risk of default (not paying)
Provisions includes:
-
non-depreciable fixed assets (land, works of
arts)
- equity
securities (bonds)
-
stocks
-
receivables (debtors, someone who owes
you)
Cases
Update in provision
- Customer: Morel - Amount: 69600 (including VAT) - Existing Provision: 14500
- Observation: Provision update: 40%
New customer to be provisioned
- Customer: Duval - Amount: 50400 (including VAT) - Observation: New customer to be provisioned (20%)
Insolvent customer (loss or reversal provision)
- Customer: Romain - Amount: 28800 (including VAT) - Existing Provision: 5800
- Observation: Customer is insolvent
Partial payment
- Customer: Franc - Amount: 81800 (including VAT) - Existing Provision: 14200
- Observation: Payment of 5000$ and provision update 20%.
Customer will be insolvent in N
- Customer: Hamon - Amount: 38400 (including VAT) - Observation: 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
Inventory Value < Original Value
= probable loss = provision
Capital gain (inventory value > original value) = no entry
Financial assets
200 investement securities at 210 each.
- Original Unitary Price:
- Inventory Unitary Price:
- Original Value:
- Inventory Value
LOSS =
LOSS =
=
Inventory stock
500 iPhones X at $900 each and worth now $797 each.
- Original Unitary Price:
- Inventory Unitary Price:
- Original Value:
- Inventory Value
LOSS =
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