Prof. Dr.

Carsten Berkau page: 1

CONTROLLING
Accounting 1 - Business Accounting
(13 - Depreciation)
Depreciation)
by
Prof.
. Dr.
Prof Dr . Carsten Berkau

Source:
13.1
13.1
Acc1.ppt
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at my website: www.Prof-Berkau.de;
use: FHOSStudent (Remarque)
based on: University of Applied Sciences
IFRS 2003
© Prof Dr Carsten Berkau, 2005

The accounting concept (Berkau

(Berkau//Rosenberg)
Rosenberg)
BOOKS OF FINANCIAL
ORIGINAL ENTRY STATEMENTS
(IFRS)
CONTROLLING

Purchase journal /
Balance
Return outwards sheet
Sales journal /
Return inwards
Income
Cash book statement
General Trial
Adjustm.
Petty cash book ledger balance Statement
of changes
in equity
Payroll

Cash flow
Journal statement

Conversion
Notes

Source:
13.2
13.2
Acc1.ppt
This slide can be accessed
at my website: www.Prof-Berkau.de;
use: FHOSStudent (Remarque)
based on: University of Applied Sciences
IFRS 2003
© Prof Dr Carsten Berkau, 2005

- Controlling -
Prof. Dr. Carsten Berkau page: 2

HPG’s BS - only depreciation

A Hpg's BS as at 31 Dec 20XX C,L

CONTROLLING
Assets [EUR] SH's capital [EUR]
P,P,E 47.667 Issued capital 40.000
Int, assets Reserves
Fin, assets Retained ear. -2.333
Inventory Liabilities
Receivables Int. bear. liab.
Perpaid exp. Payables 14.000
Cash 4.000 Provisions
Def. income
Tax liabilities
51.667 51.667

simplified BS

Source:
13.3
13.3
Acc1.ppt
This slide can be accessed
at my website: www.Prof-Berkau.de;
use: FHOSStudent (Remarque)
based on: University of Applied Sciences
IFRS 2003
© Prof Dr Carsten Berkau, 2005

HPG’s IS - only depreciation

HPG's IS for 20XX

[EUR]
CONTROLLING

revenue 0
other income
changes in inventory
work capitalized
raw material used
employee expense
depreciation 2.333
impairment of P,P,E
other expenses
finance costs
share of profit of ass.
profit before tax -2.333
income tax expenses
deferred tax
profit for the period -2.333

Source:
13.4
13.4
Acc1.ppt
This slide can be accessed
at my website: www.Prof-Berkau.de;
use: FHOSStudent (Remarque)
based on: University of Applied Sciences
IFRS 2003
© Prof Dr Carsten Berkau, 2005

- Controlling -
Prof. Dr. Carsten Berkau page: 3

Depreciation

IAS 16.43
Each part of an item of property, plant and equipment with a cost that is

CONTROLLING
significant in relation to the total cost of the item shall be depreciated
separately.
Judgement !!

IAS 16.48
Depreciation charge shall be recognized in the income statement.
IAS 16.50
The depreciation amount of an asset shall be allocated on a systematic basis
over its useful life.
IAS 16.60
The depreciation method used shall reflect the pattern in which the asset’s
future benefits are consumed.
IAS 16 does not prescribe any depreciation method other than in IAS
16.50 and .60! IAS 16.62 only names examples for depreciation
methods.
Source:
13.5
13.5
Acc1.ppt
This slide can be accessed
at my website: www.Prof-Berkau.de;
use: FHOSStudent (Remarque)
based on: University of Applied Sciences
IFRS 2003
© Prof Dr Carsten Berkau, 2005

Depreciation Amount and Period

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IAS 16.53, .54

Depreciable amount is determined after deducting its residual value - if
significant. In practice it is often immaterial. If the residual value exceeds the
carrying amount the depreciable value is zero.
IAS 16.55
Depreciation of an asset begins when it is available for use.
IAS 16.56, .57
The future economic benefit of an asset is consumed by its use. Normally the
time the asset can be used is given by its useful life. Depending on the use of
an asset the useful life of an asset can be shorter than its economic life. The
estimation of the useful life is a matter of judgement based on the experience of
the entity.

Source:
13.6
13.6
Acc1.ppt
This slide can be accessed
at my website: www.Prof-Berkau.de;
use: FHOSStudent (Remarque)
based on: University of Applied Sciences
IFRS 2003
© Prof Dr Carsten Berkau, 2005

- Controlling -
Prof. Dr. Carsten Berkau page: 4

Arithmetic declining method (example)

period DepC AC

CONTROLLING
1 20.000,00 90.000,00
2 18.000,00 72.000,00
3 16.000,00 56.000,00
4 14.000,00 42.000,00
The difference
between DepCs 5 12.000,00 30.000,00
regulary is 6 10.000,00 20.000,00
2.000 EUR
7 8.000,00 12.000,00
8 6.000,00 6.000,00
9 4.000,00 2.000,00
10 2.000,00 0,00

with: AC = cost of acquisition = 110.000 EUR, Useful life = 10 a; DepC = Depreciation

charge; CA = Carrying amount
Source:
13.10
13.10
Acc1.ppt
This slide can be accessed
at my website: www.Prof-Berkau.de;
use: FHOSStudent (Remarque)
based on: University of Applied Sciences
IFRS 2003
© Prof Dr Carsten Berkau, 2005

Geometric declining method with γ = 20% (example)

period DepC CA
CONTROLLING

1 22.000,00 88.000,00
2 17.600,00 70.400,00
3 14.080,00 56.320,00
4 11.264,00 45.056,00
DepC
regularly is 5 9.011,20 36.044,80
20%of the last 6 7.208,96 28.835,84
carrying
amount 7 5.767,17 23.068,67
8 4.613,73 18.454,94
9 3.690,99 14.763,95
10 2.952,79 11.811,16

with: AC = cost of acquisition = 110.000 EUR, Useful life = 10 a; DepC = Depreciation

charge; CA = Carrying amount
Source:
13.11
13.11
Acc1.ppt
This slide can be accessed
at my website: www.Prof-Berkau.de;
use: FHOSStudent (Remarque)
based on: University of Applied Sciences
IFRS 2003
© Prof Dr Carsten Berkau, 2005

- Controlling -
Prof. Dr. Carsten Berkau page: 5

CONTROLLING
BAD DEBTS ...

Source:
13.12
13.12
Acc1.ppt
This slide can be accessed
at my website: www.Prof-Berkau.de;
use: FHOSStudent (Remarque)
based on: University of Applied Sciences
IFRS 2003
© Prof Dr Carsten Berkau, 2005

HPG's Balance sheet as at 31 Mrch 20X2

Non-current assets [EUR] [EUR]

Property, plant and equipment 50.000,00
Investment property
Intangible assets
CONTROLLING

Financial assets
Total of non-current assets 50.000,00

Current assets
Inventories 27.192,50
Trade and other receivables 450,00
Cash and cash equivalents 66.277,00
Prepaid expenses
Total of current assets 93.919,50
Total assets 143.919,50

Liabilities
[...] Interest bearing liabilities 40.000,00
Trade and other payables 36.851,00
Provisions
Liabilities and assets [...] IAS 12
Deferred tax liabilities [...] IAS 12
Deferred income
Total of liabilities 76.851,00

Capital
Issued capital 62.700,00
Other reserves 4.368,50
Retained earnings
Total of shareholder's equitySource: 67.068,50
13.13
13.13
Acc1.ppt
at my
This slide can be accessed
Total equity
website: and liabilities
www.Prof-Berkau.de; 143.919,50
use: FHOSStudent (Remarque)
based on: University of Applied Sciences
IFRS 2003
© Prof Dr Carsten Berkau, 2005

- Controlling -
Prof. Dr. Carsten Berkau page: 6

HPG’s income statement for 1st Quater of 20X2

McT's income statement for 20X1

[EUR]

CONTROLLING
revenue 12.478,00
other income 1.500,00
changes in inventory of finished goods and work
in progress 27.192,50
work performed by the entity and capitalized

raw material and consumables used 35.531,00

employee benefits expense
depreciation and amortization expense
impairment of property, plant and equipment
other expenses 1.271,00
finance costs
share of profit of associates
profit before tax 4.368,50
income tax expenses 0,00
deferred tax income/expense
profit for the period 4.368,50

Source:
13.14
13.14
Acc1.ppt
This slide can be accessed
at my website: www.Prof-Berkau.de;
use: FHOSStudent (Remarque)
based on: University of Applied Sciences
IFRS 2003
© Prof Dr Carsten Berkau, 2005

Bad debt - 450 EUR

CONTROLLING

D Bad debts C
20X2 [EUR] 20X2 [EUR]
03/31 Debtor Uni Hannover 450,00 03/31 Profit and loss account450,00

d Debtor Universität Hannover c

20X2 € 20X2 €
02/24 Sales 450,00 02/29 Balance c/d 450,00
03/01 Balance b/d 450,00 03/31 Bad debts 450,00
04/01 Balance b/d 0,00

Source:
13.15
13.15
Acc1.ppt
This slide can be accessed
at my website: www.Prof-Berkau.de;
use: FHOSStudent (Remarque)
based on: University of Applied Sciences
IFRS 2003
© Prof Dr Carsten Berkau, 2005

- Controlling -
Prof. Dr. Carsten Berkau page: 7

HPG's Balance sheet as at 31 Mrch 20X2

Non-current assets [EUR] [EUR]

Property, plant and equipment 50.000,00
Investment property
Intangible assets

CONTROLLING
Financial assets
Total of non-current assets 50.000,00

Current assets
Inventories 27.192,50
Trade and other receivables 0,00
Cash and cash equivalents 66.277,00
Prepaid expenses
Total of current assets 93.469,50
Total assets 143.469,50

Liabilities
[...] Interest bearing liabilities 40.000,00
Trade and other payables 36.851,00
Provisions
Liabilities and assets [...] IAS 12
Deferred tax liabilities [...] IAS 12
Deferred income
Total of liabilities 76.851,00

Capital
Issued capital 62.700,00
Other reserves 3.918,50
Retained earnings
Total of shareholder's equitySource: 66.618,50
13.16
13.16
Acc1.ppt
at my
This slide can be accessed
Total equity
website: and liabilities
www.Prof-Berkau.de; 143.469,50
use: FHOSStudent (Remarque)
based on: University of Applied Sciences
IFRS 2003
© Prof Dr Carsten Berkau, 2005

HPG’s income statement for 1st Quater of 20X2

McT's income statement for 20X1

[EUR]
CONTROLLING

revenue 12.478,00
other income 1.500,00
changes in inventory of finished goods and work
in progress 27.192,50
work performed by the entity and capitalized

raw material and consumables used 35.531,00

employee benefits expense
depreciation and amortization expense
impairment of property, plant and equipment
other expenses 1.721,00
finance costs
share of profit of associates
profit before tax 3.918,50
income tax expenses 0,00
deferred tax income/expense
profit for the period 3.918,50

Source:
13.17
13.17
Acc1.ppt
This slide can be accessed
at my website: www.Prof-Berkau.de;
use: FHOSStudent (Remarque)
based on: University of Applied Sciences
IFRS 2003
© Prof Dr Carsten Berkau, 2005

- Controlling -