Project Topic:

ASSESS DEPRECIATION ACCOUNTING PRACTICES AND PROFITABILITY OF SELECTED SMES

Project Information:

 Format: MS WORD ::   Chapters: 1 - 5 ::   Pages: 66 ::   Attributes: Questionnaire, Data Analysis, Abstract  ::   1,281 people found this useful

Project Department:

ACCOUNTING UNDERGRADUATE PROJECT TOPICS, RESEARCH WORKS AND MATERIALS

Project Body:

CHAPTER ONE

INTRODUCTION

Depreciation is one of the most controversial and troublesome areas in accounting.

Depreciation was actually a cost of doing business. Business executive tended to view depreciation as a matter of setting aside something during prosperous periods for the replacement of depreciable assets. When earnings are high, large amounts of depreciation might be recorded and when earnings were low or less provision for depreciation was recorded. Today, it is universally agreed that depreciation is an expenses that must be recorded whether or not revenue is sufficient to absorb it.

Depreciation has been given different interpretations and meanings by various authors and experts in the accounting field as a result many definitions of depreciation exist as many as the authors and experts themselves.

Some of the numerous definitions of the term depreciation as defined by many authors will be examined.

          The institute of chartered accountant of Canada defined depreciation as a proportionate charge of an expanse to an accounting period based the cost as other recorded value of fixed assets. Himmed Clan (third international congress on accounting defined depreciation as the price spreading the value of a fixed asset.

Montgomery (auditing theory and practice) defined depreciation as an allocation of the entire cost of depreciable assets to the operating express of a series of fiscal period.

The American Institute of Certified public Accountants defined depreciation accounting as a system of accounting which aims to distribute the cost or other basic value (if any) over the estimated useful life of the unit which may be a group of assets in a systematic and rational manner.

Depreciation is a part of the cost of a fixed asset is not recoverable on disposal and is this part of the cost of fixed assets consumed during its period of use by the firm. It is an expense, which is charged to the profit and loss account of a period before ascertaining the real net profit or loss of an enterprise.

Depreciation is sometimes divided into two classes:

INTERNAL DEPRECIATION:

Internal depreciation which arises from the operation of any cause natural to or inherent in the asset itself for instance, wear and tear of plant and machinery.

EXTERNAL DEPRECIATION:

External depreciation which arises from the operation of forces apart from the assets itself for instance obsolescence, inadequacy and decay.

Depreciation according Walter Mergs is that portion of the cost of fixed assets that is deductible from revenue for the asset services used in the operations of the business. In practice, the term depreciation is used to describe the cost of the expired services of tangible fixed assets.

STATEMENT OF THE PROBLEM.

Most people are not aware of the resultant effect of adopting one depreciation method or another on the reported profits and in the net book value of assets stated in the financial statement of a business concern and so they tend to pass erroneous judgment on the profitability or performance comparison between companies by mere looking at either reported profit in the financial statement. It is therefore imperative that research be conducted to find the following problems:

  1. How to determine the probable use life of an asset.
  2. How to estimate the depreciation amount to be charged over its useful life.
  3. What is appropriate depreciation method to be used?
  4. Whether the use of varied depreciation methods by concerns of assets stated in the balance sheet at the year-end.
  5. Whether the amount carried in the account of property plant and equipment and hence the depreciation charges should be reviewed periodically in the line with inflation. These are burning problems, which the researcher would find arises to.

OBJECTIVES OF THE STUDY.

The general objectives of the work are to assess depreciation accounting practices and profitability of selected SMEs in Port harcout

  1. To find out what influences company’s chance of depreciation methods.
  2. To find out what impact depreciation has on the company’s profitability and tax.
  3. To find out other significance depreciation has on the company’s financial statement.
  4. To ascertain whether proper treatment is given to depreciation accounting by the companies studied.
  5. To look into the records kept in respect of plant machinery and equipment in order to secure effective control over them through proper accounting.
  6. Make recommendations based on finding thereof.

HYPOTHESIS FORMULATION

For the purpose of the following hypothesis will test on generalization of the impact of different methods of depreciation on the profitability of a company.

H0     The different methods of depreciation do not have an impact on the profitability of a company.

H1     The different methods of depreciation have an impact on the profitability of a company.

H0     Depreciation does not have any impact on management decisions.

H1     Depreciation has an impact on management decisions.

THE SIGNIFICATION OF STUDY.

  1. This project will be useful to many companies in Nigeria in that it many companies in Nigeria in that it will provide an in sign into the effect of depreciation in income statement.
  2. it enables the determine the extent to which depreciation could help to
  3. Build funds for the replacement of their asset at the end of the existing asset useful life.

B      Reduce tax payable to the government by reducing the company’s profit.

  1. The study will also prove useful to the shareholder in that depreciation reduces the declared profit and the amount payable as dividend to shareholders. It has the advantage of not affecting the company’s working capital as other expense do.
  2. Both the federal and state government will benefit from this study since depreciation determines the volume of the company’s profit and the amount of tax payable to the government.

The study will also portray the reason. Why our also tax law disallow depreciation, but instead provide capital allowance for the purpose of computing income tax.

  1. The study  will hopefully be useful to other researchers, in that it will add to the existing literature in the subject.
  2. Finally the project will be useful to the researcher, in that it is presented in partial fulfillment for the award of diploma in accountancy.

THE SCOPE OF THE STUDY

The project covers the depreciation accounting practices and profitability of selected SMEs in portharcourt. It includes the impact of depreciation accounting on income statement reporting in perspective.

LIMITATIONS OF THE STUDY

In a study of this nature, a lot of limitation is bound to occur. It will be left to the researcher to strive to achieve the list he could inspite of this limitation:

Get the complete project »


Instant Share On Social Media:


Can't find what you are looking for?
Call (+234) 07030248044.

OTHER SIMILAR ACCOUNTING PROJECTS AND MATERIALS

AN APPRAISAL OF THE IMPLICATION OF ELECTRONIC BANKING IN NIGERIA BANKS (A CASE STUDY OF ACCESS BANK)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 67 ::   Attributes: Secondary data, Data Analysis,Abstract  ::   21811 engagements

CHAPTER TWO REVIEW OF RELATED LITERATURE Electronic banking in Nigeria has overtime been viewed by many especially economists as having a lot of implications on the economy of Nigeria and especially...Continue reading »

A CRITICAL ANALYSIS OF THE USE OF FINANCIAL STATEMENTS IN ASSESSING THE PERFORMANCE OF AN ORGANIZATION (A CASE STUDY OF FIRST BANK NIGERIA)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 75 ::   Attributes: Questionnaire, Data Analysis, Abstract  ::   20223 engagements

ABSTRACT The study was carried out to analyse how an organization performs making use of the financial statements with First Bank of Nigeria Plc serving as the case study. the study disclosed that th...Continue reading »

AN EVALUATION OF THE PERFORMANCE OF NIGERIAN STOCK EXCHANGE IN THE ECONOMIC DEVELOPMENT OF NIGERIA ( A CASE STUDY OF NIGERIAN STOCK EXCHANGE)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 78 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   9819 engagements

HISTORICAL BACKGROUND OF THE NIGERIA STOCK EXCHANGE IN THE ECONOMIC DEVELOPMENT OF NIGERIAN. The nigeria stock excahnge denoted by NSE is a government establishment where stocks are traded on a daill...Continue reading »

APPLICATION OF BUDGETS AND BUDGETARY CONTROL MEASURES IN A NON-PROFIT ORGANIZATION: A CASE STUDY OF APOSTOLIC CHURCH, DELTA

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 76 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   13468 engagements

2.1 CONCEPTUAL FRAMEWORK A budget is can be defined by accountants as “a planned outcome to be generated and for the expenditure to ensure during that period and the capital to be employed to a...Continue reading »

ASSESSING BOOK-KEEPING PRACTICES OF SMALL AND MEDIUM SCALE ENTERPRISES IN CALABAR LOCAL GOVERNMENT AREA

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 69 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   12085 engagements

ABSTRACT The economy of Nigeria cannot function properly or thrive without the micro, small and medium scale enterprises (SMEs). These small scale enterprises cannot function properly if they are not ...Continue reading »

ASSESSMENT OF ADEQUATE RISK RECOGNITION AND MANAGEMENT IN NIGERIAN INSURANCE COMPANIES (A CASE STUDY OF UNION ASSURANCE COMPANY, UYO)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 86 ::   Attributes: Questionnaire, Data Analysis  ::   7908 engagements

THE CONCEPT OF RISK Risk has been the subject of study by different scholars over the years with several meaning and definitions. But the most accepted definitions are that of J.E Banister and P.A Baw...Continue reading »

What are looking for today?

WHAT OUR CUSTOMERS ARE SAYING:
  • 1. Abiola Adesanya from University Of Lagos Nigeria said "The best portal for undergraduate research projects and free project topics in Nigeria. Kudos to you guys! Project Clue".
    Rating: Very Good
  • 2. Dabung Timothy from University of Jos said "The effect of job stress on employees performance".
    Rating: Excellent
  • 3. Elkanah Umma from Ahmadu Bello University Zaria said "I had wonderful working experience from you guys. Your side is perfect for research! Keep helping the customers.".
    Rating: Very Good
  • 4. Mamudu Jalloh from University of Makeni said "I actually love it because of it quality ".
    Rating: Excellent
  • 5. Nasra Mohammed Hersi from Simad university said "Thanks for your sharing ".
    Rating: Excellent
  • 6. Ahmed Abdi Mohamud from Abaarso Tech University said "I have a wonderful experience using ProjectClue,".
    Rating: Excellent