Depreciation Schedule

This week our topic in our business math subject is all about depreciation schedule. Depreciation schedule is  an accounting procedure for determining the amount of value left in a piece of equipment. In my opinion this our easiest topic so far. Maybe because I understand it easily even it is very cold in the classroom and it is easy to solve the problem given to us in our seat work.


It is very important to know what is depreciation schedule because so that we can accept that in a business the product will not always have the same value because when time goes by it's demand will go down so the sales wil also lessen.


 Purposes:
1. to provide for the recovery of capital which has been invested in physical property .
2. To enable the cost of depreciation to be charged to the cost of producing products or services that results from the use of the property.




 To further understand depreciation here are some terminologies that are related to it:

Depreciation is the decrease in the value of physical property with the passage of time. The yearly deposits into the depreciation fund are called depreciation charges. The depreciation fund is the portions of a given amount at the end of its useful life or the difference between the original cost of the asset and the sum in the depreciation fund is called the book value of the asset. At the end of the year.


There are many types of depreciation which are:
1,Physical depreciation-is due to the lessening of the physical ability of the property to produce results.Its common causes are wear and deterioration.
2. Functional depreciation- is due to the lessening in the demand for the function which the property was designed to render. Its common causes are inadequacy ,changes in styles, population centers shifts, saturation of markets or more efficient machines are produced.
3. depreciation due to changes in price levels is almost impossible to predict and therefore is not considered in many economy studies.
4. Depletion refers to the decrease in the value of a property due to gradual extraction of its content.


Solving the depreciation:


In getting the depreciation the formula is:
Depreciation=  cost- scrap value
average yearly depreciation= depreciation/ years


Here is an example given to us by our professor: Crisencio M.Paner, may this be a guide to you in computing for the depreciation A machine cost 20,000 has an estimated scrap value of 4000 and a probable life of 40,000 hours .a.) Find the depreciation cost per operating hours. b) prepare a depreciation schedule showing the book value for each of the 4 years of the machines's life during which the hour of operation are 10,000,9000,12,000,15,000




solution:
 Depreciation=  cost- scrap value=20,000-4000=16000


charge for operating hours: 16,000/40,000= 0.40/hr




                                            

Year	Hours of operation	Depreciation Charge	Amount in depreciation Fund	Book Value at the end of the year
0	0	0	0	20,000
1	10,000	10,000 (0.4)        =4,000	4,000	16,000
2	9,000	9,000 (0.4)=3,600	7,600	12,400
3	12,000	12,000 (0.4) =4,800	12,400	7,600
4	9,000	9,000   (0.4) =3,600	16,000	4,000
TOTAL	40,000	16,000

I hope this example will help you in you in computing for your depreciation. Have a nice day!




Checked by .Prof Crisencio M. Paner

It started like an ordinary Thursday, I came early , we started our first class that day, IIND. But a few hours after the start of our class my classmates start noticing something outside, at first we thought that its only the sand from the field, because usually when the wind blows dusts, sands etc are always blown with it. But it is not an ordinary mini "sand storm", it is a real smoke. The smoke becomes larger and larger. We finally realize that there is fire near our building,as we open the window it gets really hot and the smoke that's getting in is really suffocating. After some minutes they declare that there is fire near our building(I do not know where it is). So we are commanded that we should get out of the building immediately. Minutes after all of us are outside the building. We are beginning to form conclusions that there will be no classes. But our hopes have shattered when it is announced that the classes will resume at 5:00 PM,that only means one thing, that there will be math. There is one thing that I'm sure about: Nothing can ever stop math, even fire.


Enough of the fire, lets talk about math. What a relief that there will be no quizzes, it means that i will not be to nervous to the point that I can't listen well to our topic. This Thursday our topic is all about bank reconciliation. Bank reconciliation,what in the world is that!? According to my professor it about

Bank Reconciliation is the process of bringing the bank's monthly report for each depositor showing deposits made, check written, cancelled checks, and service charges. The next thing he mentioned is Reconciliation statement which also had put a big question mark on my face, after giving the information i have learned that Reconciliation statement putting an agreement the bank statement balance and the checkbook balance.

The differences in the balances may be due to:

1. Outstanding checks. These are checks issued by the depositor but have not yet been presented to the bank for payment.

2. Deposits in transit. These are deposits made but late to be included in the monthly bank statement.

3. Service charges.

4. Errors in the check stub entries.

5. Cancelled checks. These are checks that have been paid by the bank.

Speaking of checks I have remembered a movie called blank check . Blank checks are very dangerous , because the check is already signed anyone can write any amount they want and en cash it. Having checks is have its own advantages and disadvantages. So you should be responsible enough to handle a check,and avoid giving blank checks. In case you haven't seen a check this is what it looks like :

Parts of a check based on a UK example

1. drawee, the financial institution where the cheque can be presented for payment
2. payee
3. date of issue
4. amount of currency
5. drawer, the person or entity making the check
6. signature of drawer
7. Machine readable routing and account information

But the main parts of a check are(they should always be present):

Drawer, the person or entity who makes the cheque

Payee, the recipient of the money

Drawee, the bank or other financial institution where the cheque can be presented for payment

Amount, the currency amount

I hope that this will help you a lot , i also hope that you will be a responsible person who will take care of you valuable checks.

Reality

I have realized that nowadays people need money, we try to find ways to earn money.We patiently look for a job that is suited for us.But it is do hard to find these days, in fact one of our country's biggest problem is unemployment.Each year thousands of fresh college graduates are adding up to the number of unemployed people.Not only that most of the people that are employed are what we called under employed. Under employed means that one's job is not suited for him/he or not related to their course,like for example: Mari is a graduate of nursing but her job is being a call center agent. Another situation is many filipinos are working abroad, they are what we called overseas filipino workers (OFW).They sacrifice by being away from their love ones. They are miles and miles away without anyone they know to comfort them.Also they risking their lives, like what we always hear in the news that many OFW's are being beaten up.Because of those situations our government is encouraging us to put up our own business. Putting up a business is very accessible to us all. You can hear about it in the televisions, radios, through other people. You can also read about it in the news paper, fliers etc. Even the government are offering free workshops so that you can start it on own. Having a business is both easy and hard. If you like your business it is easy for you to manage it, if you think of it as a burden then it is really hard. Starting a business for in my is easy if you know the basics. If you enter it you must know what business math is because it is the key to the success of you business. Because it will help you to manage your earnings.


I have learned from my professor in my business math subject that in managing your business you must know this terminologies:
Profit- amount were sales are greater than the cost of goods sold and the operating expenses.

Net sales - Obtained when refunds are deducted from the gross sales.

Gross sales - Actual amount received for selling the goods.

Refunds - Amounts that are given back to the customers if the product is defective.

Gross profit- The difference between net sales and the cost of goods sold.

Cost of Goods Sold/Buying Price - The amount paid for the products bought including the buying  and production expenses.

these terminologies will guide you into this formulas that will help you track  your money whether your business earning or flopping. 

 net sales - cost of goods = gross profit                  

 gross profit – operating expenses = net profit

 gross sales – refunds = net sales

 net sales – cost of goods = gross profit

 gross profit – operating expenses =  net profit

You may think that it is hard because it has math, but you can't escape math to be a successful entrepreneur you must face lots of computations. It really shows that math is like a black hole whatever you d you cant escape it.