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XI (3)
METHODS, TECHNIQUES AND PRACTICE
OF CREATIVE ACCOUNTING FOR DEPRECIATION
L. CERNUŞCA∗
∗
„Aurel Vlaicu”University Arad, Romania
FACULTATEA DE MANAGEMENT AGRICOL
Case A Case B
Indicators
Rv = 2.000 lei Rv = 1.000 lei
Sales figure 90.000 90.000
Third party services 50.000 50.000
Personnel expenses 30.000 30.000
Depreciation expenses 2.600 2.800
Other expenses 500 500
Operating result 6.900 6.700
Lei
• In case A, the estimation of a higher residual value leads to lower
depreciation costs and also to the increase of the operating result
• In case B, the estimation of a lower residual value leads to bigger
depreciation costs and also to the decrease of the operating result.
Below is presented the influence on the balance sheet:
Case A Case B
Indicators
Rv = 2.000 lei Rv= 1.000 lei
Tangible assets
15.000 15.000
(raw value)
Depreciation
(2.600) (2.800)
of tangible assets
Tangible assets
12.400 12.200
(net value)
Lei
LUCRĂRI ŞTIINŢIFICE, SERIA I, VOL. XI (3)
Situation 3. On 01.01.N, a company acquires a machine at the
acquisition cost of 20.000 lei. The estimated duration is 5 years and the
method that best satisfies the pattern of consumption is the linear method.
The annual and accumulated depreciation’s effects on the profit and loss
account, in the situation in which the residual value is 4.000 lei or null, is
presented below:
* 3.000 = 15.000/5
** 3.000 = 15.000/5
*** 4.500 = 3/6 x (15.000- 6.000)
**** 3.000 = 2/6 x (15.000 – 6.000)
***** 15.000 = 1/6 x (15.000 – 6.000)
The influence over the profit and loss account is presented below:
FACULTATEA DE MANAGEMENT AGRICOL
Year N+2:
Straight line Company’s department of Company’s department of
depreciation management has the interest of management has the interest of
Indicators is mentained increasing the profit or loss for decreasing the profit or loss for
until the end the year N+2. SOFTY formula is the year N+2. Progressive method
of duration used. (Case A) is used. (Case B)
Sales figure 100.000 100.000 100.000
Third party services 70.000 70.000 70.000
Depreciation expenses 3.000 4.500 1.500
Other expenses 1.000 1.000 1.000
Operating result 26.000 24.500 27.500
Lei
Changing the method for calculating the depreciation, leads to an
increase (case A) or a decrease (case B) of the operating result. The
influence over the balance sheet is presented on the table below:
Year N+2:
Straight line Company’s department of Company’s department of
depreciation management has the interest of management has the interest of
Indicators is mentained increasing the profit or loss for decreasing the profit or loss for the
until the end the year N+2. SOFTY formula is year N+2. Progressive method is
of duration used. (Case A) used. (Case B)
Tangible assets
15.000 15.000 15.000
(raw value)
Depreciation
(3.000) (4.500) (1.500)
of tangible assets
Tangible assets
12.000 10.500 13.500
(net value)
Lei
BIBLIOGRAPHY