Cambridge University Research

 

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• THE CAMBRIDGE UNIVERSITY RESEARCH 

 

Let’s see The Cambridge University Research again!!! 

 

• According to a research at Cambrigde University, it deosn’t matter in what order the letetrs in a word are, the only important thnig is taht the fisrt and lsat leters be at the rgth palce. The rset can be a totol mses and you can still raed it withuot porblem. This is bcuseae the human mind deos not raed ervey leter by istlef, but the word as a wlohe. 

 

• Pettry amzanig, huh? 

 

 

• You will notice that the first and the last letters are at the right places, even though the middle letters are in a mess/scattered. 

 

 

• DO YOU KNOW WHERE YOU STARTED FROM? 

• DO YOU KNOW WHERE YOU ARE GOING TO? 

• DO YOU HAVE A CLEAR GOAL? 

• CLARITY OF YOUR GOAL WILL KEEP YOU ON TRACK AMIDST THE SCATTERED PERIODS AND UNREWARDING TIMES. 

• AMIDST YOUR SCATTERED PERIODS, YOU SHOULD NOTE THAT--- 

 

The most important factor in success is your MINDSET & THINKING 

 

Be clear about the beginning and your desired end; focus and think positively and this will reflect in your actions. 

 

 

Yours Sincerely, 

 

The Training Place of Excellence Limited 

Profit and Loss Account

The Extended Trial Balance

The Power of the Mind & Brain- Cambridge University

A Word of Encouragement

Depreciation

 

DEPRECIATION

 

Depreciation is an estimate in amount for the wear and tear of a non-current asset used in a business for its day-to-day operations. It is a part of the original cost of such asset that is consumed during its period of use by the business and it is represented in the statement of profit or loss as an expenditure, calculated as a fraction of the total cost of the asset.

 

The two most common methods of calculating depreciation are;

·        Straight line method

·        Reducing balance method

 

With straight line method of depreciation, the total value of the asset less any residual value (if any) is written off evenly over the estimated life of the asset.

 

 

Annual depreciation charge =  Cost – Estimated residual value

                                                    Useful economic life of the asset

 

With reducing balance method of depreciation, a fixed percentage is charged on the cost of the asset in the first year and subsequent years, the same fixed percentage is charged on the current net book value of the asset.

 

Annual depreciation charge in Year 1 = Cost x fixed %

 

Annual depreciation charge in Year 2 and subsequent years = Net Book Value x fixed %

 

Exercise:

An equipment has been purchased by a business at the cost of £60,000 and it is to be depreciated at 25% using reducing balance and straight line methods of depreciation.

 

Calculate the annual depreciation charge for the non-current asset for the first two years.

Answer:

 

Reducing balance depreciation

Straight line depreciation

Year 1

25% x £60,000= £15,000

25% x £60,000= £15,000

 

NBV= £60,000-£15,000= £45,000

NBV= £60,000-£15,000= £45,000

 

 

 

Year 2

25% x £45,000= £11,250

25% x £60,000= £15,000

 

NBV= £45,000-£11,250= £33,750

NBV= £45,000-£15,000= £30,000

So you will see that the depreciation value will start to reduce where the reducing balance method is used but the depreciation value will remain the same across 4 years where the straight line method of depreciation is used.

What do accountants suffer from that normal people don't?

 

What do Accountants suffer from that ordinary people don’t?

Depreciation!!!

Depreciation is the wear and tear of assets which is learnt in the course of studies and this applies to non-current assets.

Michael Jordan & Marginal Costing

 

Michael Jordan, former American professional basketball player is deemed to be the greatest basketball player of all time as declared on the official NBA website.

Jordan joined the Bulls in 1984 as the third overall draft pick, and quickly emerged as a league star, entertaining crowds with his prolific scoring while gaining a reputation as one of the game's best defensive players. Jordan won his first NBA championship with the Bulls in 1991, and followed that achievement with titles in 1992 and 1993 but suddenly retired before 1993-94 NBA season to play Minor League Baseball but returned to the Bulls in March 1995 and led them to three more championships in 1996, 1997 and 1998, as well as a then-record 72 regular-season wins in the 1995–96 NBA season. He played 15 seasons in the NBA, winning six championships with the Chicago Bulls earning NBA Finals Most Valuable Player (MVP) Awards.

In 2014, Jordan became the first billionaire player in NBA history. With a net worth of $2.1 billion, he is the fourth-richest African American and the richest former professional athlete in the world.

His leaping ability, demonstrated by performing slum dunks from the free throw line in Slam Dunk contests, earned him the nicknames "Air Jordan" and "His Airness".

In 1984, Michael Jordan signed an initial contract with Nike worth $500,000 annually and this helped transform Nike and led to an earning of over $1 billion for Michael as he fuelled the success of Nike’s Air Jordan sneakers becoming the biggest endorsement bargain in sports.

Can we imagine the costing system which may be applicable to keeping the records of the sales of the Air Jordan sneakers?

Absorption costing OR Marginal costing OR any other costing system?

Exercise:

The following budgeted figures relate to a Nike factory that produces the Air Jordan sneakers.

Overheads are absorbed on a budget production basis and inventory is valued on a FIFO basis.

	Month 1
Selling price per pair of sneakers (£)	160
Production (units)	6,000
Sales (units)	5,500
Direct materials per unit (£)	22
Direct labour per unit (£)	20
Other variable production costs (£)	126,000
Fixed production costs (£)	186,000

Marginal Cost/ Unit:

Direct materials per unit (£)	22
Direct labour per unit (£)	20
Other variable production costs (£)	21
Marginal cost / unit	63