1. Define and list two classifications of each of the following:

1. asset;
2. liabilities.

1. State and explain the factors to be considered in determining the annual depreciation charge for a fixed asset.

observation

Majority of the candidates who attempted this question did well in 2(a) only.  While in 2(b) candidates listed methods of depreciation instead of the factors that determine depreciation charged.  The expected answer includes:

          2(b)   Factors to be considered in determining annual depreciation charged for a Fixed
                   Asset are:

• Cost;
• Estimated useful life of the asset;
• Estimated scrap value.

Cost – This is the amount paid for the acquisition of the asset.

Estimated useful life of the asset – This is the expected period time which an asset is to be used.

          Estimated scrap value - This is the expected value at which the asset could be   disposed off after its estimated useful life