Australian Dollar Depreciation Bookkeeping Question

by Ash
(Perth)

Australian Dollar Depreciation

Australian Dollar Depreciation

When the Australian dollar depreciates against the US dollar, what effect does this have on Australian exporters who export to the US?

How does it affect Australian consumers of goods imported from the US? what about the tourism industry in Australia?

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Oct 10, 2023
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starstarstarstarstar 		Currency Fluctuation
by: BB

Currency fluctuations can have all sorts of impacts on businesses and consumers, and it's a topic that's as exciting as it is complex. Let's break down how a depreciating Australian dollar (AUD) affects different aspects of the economy.

#Australian Exporters Exporting to the US

1. #Positive Impact: When the AUD falls against the US dollar, Australian goods become cheaper for American consumers. This can drive demand up for Australian exports, boosting sales and potentially profits for exporters.

2. #Increased Competitiveness: Australian products can become more price-competitive compared to goods from countries where the currency hasn't depreciated.

3. #However, Caveats Exist: If your business relies on importing raw materials priced in USD, your production costs could go up, potentially offsetting some of the benefits.

#Australian Consumers of U.S. Goods

1. #Negative Impact: A weaker AUD means it takes more Australian dollars to buy one US dollar. In simple terms, goods imported from the US will cost more in Australia.

2. #Inflation Risks: Higher import costs can lead to increased prices across various goods and services, affecting the standard of living.

#Tourism Industry in Australia

1. #Boost to Tourism: A depreciated AUD makes it cheaper for Americans to vacation in Australia, potentially boosting the local tourism industry.

2. #Mixed Bag for Australians: While domestic tourism might see a slight uptick as Australians find it more expensive to travel abroad, those who do decide to travel to the U.S. will find their trip more expensive.

#Key Takeaways

- Exporters may find a business advantage in a weaker AUD but watch out for rising import costs.
- Consumers will likely face higher prices for imported U.S. goods.

- The tourism industry might experience a mixed bag of effects but could overall benefit from increased foreign tourism.

So, if you're an Australian exporter, a falling AUD might actually be good news for you. But if you're planning on shopping for imported goods or traveling to the U.S., you might want to budget a bit more carefully. Hope this helps you understand the ins and outs of currency depreciation!

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Depreciation at Year End

Year End Depreciation

Year End Depreciation

We have recently taken over the year end accounting for a small Ltd Company and have a problem with the depreciation.

One class had final year depreciation last year and was left with a salvage value NBV only.
Should we carry this forward this year, or just write it off (it is under £10)?

The other class of fixed asset has approx. £700 remaining, but the client does not have a FA register or any details of past depreciation.

The previous years accounts and figures show a 25% on cost charge. However, the year-to-date figure does not compute that this was always the case.

At this year-end there is not a high enough NBV left for us to affect the same 25% on cost charge.

Do we assume this NBV is also salvage value? Can we effect a depreciation charge?

Thanks for your help.

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Jul 17, 2023
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starstarstarstarstar 		Depreciation Salvage Value
by: Stephanie

In regards to the first class of fixed assets with a salvage value NBV only, since the value is under £10, it is advisable to write it off rather than carry it forward.

For the second class of fixed assets with approximately £700 remaining and no past depreciation details, it is important to establish a proper fixed asset register and accurately calculate the depreciation charge.

While the previous year's accounts showed a 25% charge on cost, it is necessary to assess the year-to-date figures and determine the appropriate depreciation rate based on the remaining NBV.

If the NBV is considered salvage value, it may not be appropriate to apply a depreciation charge.

However, a thorough review of the assets' useful life and future economic benefits should be conducted to make an informed decision.

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Depreciation Calculation

by Green Sangano
(Zimbabwe)

How do I calculate depreciation using the straight-line method given the following information:

1 Jan 2023 plant costing 240,000.00
30 June 2023 bought plant @ 160,000.00.
30 March 2023 transferred to disposal account 60,000.00.

calculate depreciation using the Straightline method.

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Oct 10, 2023
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starstarstarstarstar 		Depreciation Straight-Line Method
by: BB

Calculating depreciation using the Straight-Line method is pretty straightforward (pun intended!). It's a useful skill for any bookkeeper or business owner to have, so let's dive in.

Here's what you'll need to know:

1. **Cost of the Asset**: This is the initial cost of the asset you're depreciating.

2. **Salvage Value**: This is what you expect to sell the asset for at the end of its useful life. For this example, let's assume a salvage value of zero for simplicity.

3. **Useful Life**: This is how many years you expect the asset to be useful. Let's say the plant has a useful life of 10 years.

Steps:

Plant costing $240,000 (Owned from Jan 1 to Dec 31)

1. Subtract the Salvage Value from the Cost: $240,000 - $0 = $240,000

2. Divide by the Useful Life: $240,000 / 10 = $24,000 per year

3. Since you owned it for the entire year, the depreciation for 2023 would be $24,000

Plant bought for $160,000 (Owned from July 1 to Dec 31)

1. Subtract the Salvage Value from the Cost: $160,000 - $0 = $160,000

2. Divide by the Useful Life: $160,000 / 10 = $16,000 per year

3. You only owned it for half the year, so the depreciation for 2023 would be $16,000 / 2 = $8,000

Plant transferred to disposal $60,000 (Owned from Jan 1 to March 30)

1. Subtract the Salvage Value from the Cost: $60,000 - $0 = $60,000

2. Divide by the Useful Life: $60,000 / 10 = $6,000 per year

3. You owned it for 3 months (1/4 of the year), so the depreciation for 2023 would be $6,000 / 4 = $1,500

Total Depreciation for 2023
$24,000 (First Plant) + $8,000 (Second Plant) + $1,500 (Disposed Plant) = $33,500

And there you go! The total depreciation for all your plants in 2023, using the Straight-Line method, would be $33,500.

I hope this helps you get a clearer picture of how to handle depreciation in your books. Feel free to reach out if you have more bookkeeping questions!

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Depreciation On Company Assets

I own property through my private limited company and receive rent from it, treating the rental income as "Income from Other Sources." Can I claim depreciation on this property in the Profit and Loss account?

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Aug 24, 2023
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starstarstarstarstar 		Private Limited Company
by: BB

Yes, if you own property through a private limited company and it is being used to generate rental income, you can claim depreciation on the property in the Profit and Loss account.

This is a standard accounting practice as the property is an asset of the company and is being used in the course of business. You can apply the appropriate rate of depreciation as per the applicable tax laws in your jurisdiction, and it will reduce the taxable profit of your company.

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