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Accounting for Depreciation and Non-Controlling Interest
Rating: 4.8 out of 5(3 ratings)
186 students

Accounting for Depreciation and Non-Controlling Interest

Master depreciation accounting and non-controlling interest techniques to enhance your financial reporting accuracy
Created byEDUCBA Bridging the Gap
Last updated 10/2024
English

What you'll learn

  • The fundamental concepts of depreciation accounting and its role in financial reporting.
  • Different methods of calculating depreciation, including the Unit of Production Method.
  • How to record depreciation entries and manage them using ERP systems.
  • How to analyze financial statements with a focus on depreciation impacts.
  • Reconciliation techniques for depreciation entries and examples of balancing financial records.
  • How to account for capital expenditures, assets under construction, and component depreciation.
  • The concept of impairment, its reversal, and practical case studies.
  • The differences between depreciation, depletion, and revaluation methods.
  • The basics of non-controlling interest and its significance in financial consolidation.
  • How to consolidate financial statements with non-controlling interest, using practical examples.

Course content

2 sections • 36 lectures • 4h 44m total length

  • Introduction to Depreciation Accounting7:05

    Examine depreciation accounting under International Accounting Standard 16, covering fixed assets, cost including incidental costs, useful life, availability for use, depreciation charged to profit and loss, and impairment.

  • Methods of Depreciation Accounting7:38

    The lecture covers depreciation methods, especially straight line and units of production, and explains formulas using cost less residual value over useful life and rate.

  • Unit of Production Method8:26

    Apply the units of production method to depreciate mining assets using monthly production data, compute a depreciation multiplier, adjust for impairments, and record depreciation and accumulated depreciation.

  • Accounting Entries Of Depreciation5:28
  • ERP Explanation7:30

    Explore how enterprise resource planning software like SAP tracks depreciation, trial balances, and asset categories, including mining property, closure costs, land, buildings, and intangible assets.

  • ERP Explanation Continues8:42

    Explore asset details and depreciation in the ERP system, including plant machinery and equipment, asset under construction, CJ20N project linkage, and straight-line depreciation over five years.

  • Assets History Sheet5:16

    Explore how the assets history sheet tracks asset numbers, original cost, depreciation, and acquisitions, distinguishing final capitalized assets from assets under construction and outlining retirements and transfers.

  • Assets Explore6:58

    Illustrate how net book value, depreciation, and asset disposal affect retirement and acquisition between companies, and how to compute tax depreciation using the illustrated formula.

  • Reconciliation9:31

    Explore the reconciliation process between fixed asset records and the general ledger, using examples from SAP, asset history sheets, and automated control accounts to ensure accurate depreciation.

  • Example of Reconciliation5:44

    Explore asset under construction reconciliations and clearing accounts, detailing GL balances, supporting documents, and how disposal proceeds are mapped to specific assets to reflect net gains.

  • Financial Statement Analysis in Depreciation Accounting7:28

    Analyze fixed assets and depreciation accounts using an Excel trial balance to compare two periods, reveal variances, and provide stakeholder-focused commentary on asset movements.

  • Financial Statement Analysis in Depreciation Accounting Continues7:32

    Explain how depreciation, impairments, and disposals affect fixed asset values, accumulated depreciation, and the net outcome in the P&L.

  • Trial and Balance Sheet Example in Depreciation Accounting8:28

    Explore how finance teams report fixed assets via the capital matrix report, analyzing capital expenditure and comparing project budget changes with actual spend across business units.

  • More on Trail and Balance Sheet Example10:10

    Explore variances and commentary in fixed assets and depreciation through a January–June 2017 vs January–December 2016 trial balance comparison, including closure cost assets and a building to plant machinery reclassification.

  • Capital Expenditures in Capital Marketing8:58

    Explain how disposals and impairment provisions reduce fixed asset values, and outline depreciation, accumulated depreciation, capital expenditure, asset under construction, and software as part of asset accounting.

  • Example of Capital Expenditures7:38

    Trace capital expenditures from project budget through WBS and purchase orders and invoices in SAP, showing how capitalization into AUC triggers depreciation and updates the fixed asset register.

  • Assets Under Contruction6:58

    Track quarterly capital spends and capitalization within assets under construction or capital work in progress. Calculate end-of-quarter balances and uncapitalized values to support fixed asset reporting.

  • Component Depreciation7:34

    Learn how component depreciation under IFRS allocates asset cost to significant parts, such as airframe and engine, each with its own useful life, using the straight-line method.

  • Depreciation Issues5:14

    Explore depreciation issues for partial periods and asset acquisitions and disposals, including prorating, half-year conventions, and consistency in applying depreciation methods.

  • Impairment11:00

    Assess how impairment lowers the carrying amount of long-lived assets when the recoverable amount falls. Recoverable amount is higher of fair value less costs to sell or value in use.

  • Impairment Cases Example12:39
  • Reversal of Impairment and Example7:51

    Explain reversal of impairment losses when the asset's recoverable amount exceeds its carrying amount, illustrate with an equipment example, show journal entries, and explain limits under IFRS and US GAAP.

  • Accounting Impairment Asset5:41

    Identify cash generating units for impairment when assets' cash flows are interdependent, and apply the lower of cost or net realizable value for assets held for disposal.

  • Depletion7:03

    Learn depletion in natural resources, including depletion bases and costs for mineral resources and development, with IFRS guidance and implications for impairment and equipment depreciation.

  • Depletion Continues7:06

    Apply the units-of-production depletion method by allocating costs, including restoration and intangible development, over estimated units. Multiply by extracted units and record depletion to inventory and accumulated depletion.

  • More on Depletion5:25

    Revise depletion rates prospectively when recoverable reserves change, and distinguish liquidating dividends as a return of capital versus income, applying share premium and retained earnings entries.

  • Revaluation Depreciation11:22

    Explain revaluation of assets, cost vs fair value, upward or downward adjustments, and depreciation impact on carrying amount, with unrealized gains forming revaluation surplus.

Requirements

  • Basic understanding of accounting principles and financial statements. Familiarity with general bookkeeping practices. Knowledge of financial terms and concepts. Experience with accounting software or ERP systems is helpful but not mandatory. A willingness to learn about depreciation, asset management, and financial reporting.
  • Access to a calculator or spreadsheet software for performing depreciation calculations. An interest in enhancing your accounting and financial analysis skills. No prior experience with non-controlling interest or advanced financial consolidation is required.

Description

Introduction:

This course provides a comprehensive overview of accounting for depreciation and non-controlling interest. Depreciation is a crucial aspect of accounting that impacts the financial statements and decision-making process within organizations. Additionally, understanding non-controlling interest is essential for companies with subsidiaries and complex ownership structures. Through this course, students will explore various methods, entries, and scenarios for accounting depreciation, as well as the intricacies of non-controlling interest and consolidation processes.

Section 1: Accounting for Depreciation

This section begins with an introduction to depreciation accounting, discussing its significance in maintaining accurate financial statements. Various methods of depreciation accounting, such as the Unit of Production Method, are covered in detail. Students will learn about the appropriate accounting entries required for depreciation in ERP systems, focusing on both practical examples and theoretical foundations. A deep dive into the Asset History Sheet and Asset Exploration will help students gain insights into tracking and reconciling asset depreciation over time. Reconciliation techniques, along with examples, ensure clarity on balancing financial records.

Moreover, financial statement analysis is covered, highlighting how depreciation affects various financial reports. Practical examples using trial and balance sheets, capital expenditures, and assets under construction are discussed to solidify the understanding of depreciation accounting. Component depreciation and related issues, such as impairment and its reversal, are also explored. The course covers the depletion method and its importance in accounting for natural resources. Finally, students will explore the concept of revaluation depreciation and its application in different scenarios.

Section 2: Non-Controlling Interest Tutorials

The second section transitions into the realm of non-controlling interest, beginning with a detailed introduction. The course clarifies how non-controlling interest is defined and why it's important in the context of subsidiaries. Simple examples are used to illustrate the measurement of non-controlling interest and its impact on consolidated financial statements. Students will learn about the consolidation process, working through practical examples that demonstrate how to handle non-controlling interest in real-world accounting situations. The section ends with advanced examples of consolidation, ensuring students have a robust understanding of these key concepts.

Conclusion:

This course on Accounting for Depreciation and Non-Controlling Interest equips learners with essential knowledge for managing depreciation entries and handling non-controlling interest in financial statements. By the end of the course, students will be able to confidently manage depreciation accounting processes, reconcile financial data, and handle the consolidation of financial statements involving non-controlling interest.

Who this course is for:

  • Accounting professionals seeking to deepen their knowledge of depreciation accounting and asset management.
  • Finance students looking to enhance their understanding of depreciation methods and financial reporting.
  • Business owners or managers who want to learn how depreciation impacts financial statements.
  • Individuals working in or aspiring to work in roles involving financial analysis or reporting.
  • ERP users or accountants working with asset management and depreciation modules.
  • Anyone preparing for accounting certification exams or advanced financial roles.
  • Professionals interested in learning about non-controlling interest and consolidation processes.
  • Entry-level finance or accounting staff seeking practical knowledge in depreciation and asset-related accounting.

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