Depreciation | How to Calculate Straight Line & Reducing Balance Depreciation

This video will help you understand how to calculate depreciation. The video explains how to calculate both the straight line method and reducing balance method of calculating depreciation.
Each method has clear examples and if you want to apply your new found knowledge of depreciation then download the activity worksheet here: www.tes.com/teaching-resource...
Depreciation is how much the value of an asset falls over a period of time. In order to record this expense to a business on an income statement you can use either one of these two key methods.
Firstly is the STRAIGHT LINE METHOD and secondly the REDUCING BALANCE Method. Each method enables the business to record the value lost of an asset in the expenses section of an income statement. This is an important expense to consider for a business as it can be costly if it is not monitored.
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[@PartnerWithAngela]

Very helpful thank you 🙏

[@TwoTeachers]

Really great to hear you think so, thank you.

[@therooster2563]

Thank you for this video it really helped

[@xxrashyxx936]

Go away

[@therooster2563]

@@xxrashyxx936 sorry I won’t do it again

[@xxrashyxx936]

@@therooster2563 good boy ;)

[@TwoTeachers]

You're welcome!

[@xxrashyxx936]

Oh my god i needed this thankyou so mucj,!!!

[@therooster2563]

Omg sameee !! Good luck with your test !

[@xxrashyxx936]

@@therooster2563 thankyou goodluck as well ;)))))))))))))))))))))))))))))))))))))))))));)))))))))))))))))))))))))))))))))))))))))));)))))))))))))))))))))))))))))))))))))))))))

[@therooster2563]

@@xxrashyxx936 thank you so much 😊

[@TwoTeachers]

You're welcome, glad to hear it helped.

[@TwoTeachers]

Yes, good luck with your test!

[@zidane4838]

for the reducing balance method, what if you acquired assets in the second year, do u minus the said assets then calculate the depreciation or do the opposite?

[@TwoTeachers]

The depreciation of the newly purchased asset would be calculated and that amount would be an expense for that tax year.

[@shithead4767]

yesssirr

[@TwoTeachers]

👍

[@tobymarks9211]

Exam question confused me so much it was telling me the cost of the van was £25,000 and it reduces by 16.5% each year and it asks me using the straight balance method work out how much it costs at the end of 2 years but it doesn’t give me the figures I need

[@TwoTeachers]

Hi Toby. Without seeing the exam question it is hard to help, if you ask your teacher I am sure they will explain it for you. Straight balance method doesn't sound right either as it is usually the straight line method or reducing balance method.

[@donnabennett]

Great video and exercise - is there an answer sheet please? (busy teacher asking :-)

[@TwoTeachers]

Thanks, great to hear you like it Donna. Unfortunately the worksheet doesn’t come with model answers as it was one of our earlier resources where we didn’t originally include answers. Sorry about that, hope it’s still useful to you.

[@donnabennett]

@@TwoTeachers its very helpful! Ive done the answers now ..thank you

[@TwoTeachers]

@@donnabennett Great to hear Donna 😃

[@ezekielfx_]

alpha male

[@TwoTeachers]

😂👍