VCE Accounting SAC 5 Definitions and Questions with Accurate Answers

VCE Accounting SAC 5 Definitions
and Questions

Depreciable Asset - answer a non-current asset that has a finite life, and must be
depreciated over its life

Depreciation - answer The allocation of the cost of a non-current asset over its useful
life

Depreciation Expense - answer That part of the cost of the non-current asset that has
been incurred in the current period

Historical Cost - answer The original purchase price of the non-current asset

Residual Value - answer The estimated value of the non-current asset at the end of its
useful life

Useful Life - answerThe estimated period of time for which the non-current asset will be
used by the current entity to earn revenue

Carrying Value - answerThe value of a non-current asset that is yet to be
incurred/allocated as an expense, plus any residual value

Accumulated Depreciation - answerThe total value of a non-current asset that has been
incurred over its life so far

Cost of a non-current asset - answerAll costs incurred in order to bring the asset into a
location and condition ready for use, which will provide a benefit for the life of the asset

Reasons for under depreciation - answerThe business did not anticipate that the asset
would be damaged or outdated/superseded.

Reasons for over depreciation - answerThe business did not anticipate that the asset
would be in good condition or in high demand

Profit on disposal of non-current asset - answerA revenue earned when the proceeds
from the disposal of a non-current asset are greater than its carrying value when
disposed

Loss on Disposal of a non-current asset - answerAn expense incurred when the
proceeds from the disposal of a non-current asset is less than its carrying value when
disposed