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7/21/2019 Ch03
1/9
7/21/2019 Ch03
2/9
Pearson Education Limited 2003 Atrill, McLaney:Accounting and Finance for Non-Specialists, 4th edition
OHT 3.' rofit measurement and t#e
recognition of re!enue
The realisation convention states that revenue
should be recognised only when it has been
realised. Normally, realisation is considered to
have occurred when:
T#e amount of re!enue generated can %e o%(ecti!el)
determined
T#ere is reasona%le certaint) t#at t#e amounts
o&ing from t#e acti!ities &ill %e recei!ed
T#e acti!ities necessar) to generate t#e re!enue
are su%stantiall) complete
7/21/2019 Ch03
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7/21/2019 Ch03
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7/21/2019 Ch03
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Pearson Education Limited 2003 Atrill, McLaney:Accounting and Finance for Non-Specialists, 4th edition
OHT 3./ rofit measurement and t#e
calculation of depreciation
T#e useful life of t#e asset
T#e residual !alue of t#e asset
T#e cost of t#e asset
To calculate a depreciation charge for a period, four
factors have to be considered:
T#e depreciation met#od
7/21/2019 Ch03
6/9
Pearson Education Limited 2003 Atrill, McLaney:Accounting and Finance for Non-Specialists, 4th edition
OHT 3.,
2ritten
do&n
!alue
4+5
*sset life 4)ears5
1
'
3
0
1 ' 3 0
6rap# of &rittendo&n !alue against
time using t#e straig#tline met#od
7/21/2019 Ch03
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7/21/2019 Ch03
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Pearson Education Limited 2003 Atrill, McLaney:Accounting and Finance for Non-Specialists, 4th edition
OHT 3.8 Calculating an annual depreciation
c#arge
9ear 1 9ear 39ear ' 9ear 0
and so on
"epreciation "epreciation"epreciation"epreciation
less
esidual !alue
euals
Cost
"eprecia%le amount
*sset life 4num%er of )ears5
7/21/2019 Ch03
9/9
Pearson Education Limited 2003 Atrill, McLaney:Accounting and Finance for Non-Specialists, 4th edition
OHT 3.:
;ast in- first out 4;I