What you'll learn
How assets lose value and how spending is classified.
Key ideas
- Depreciation spreads an asset's cost over its life: straight-line vs reducing-balance.
- Net book value = cost − accumulated depreciation; residual (scrap) value.
- Capital expenditure (buying/improving assets) vs revenue expenditure (running costs).
Exam tips
- Learn both depreciation methods.
- Classify spending as capital or revenue.
Common mistakes
- Confusing the two depreciation methods.
- Mixing up capital and revenue expenditure.