Lesson Plan for Senior Secondary 1 - Financial Accounting - Depreciation Account Iii

### Lesson Plan: Financial Accounting - Depreciation Account III #### Objective: Students will understand and be able to record depreciation using different methods and appreciate its impact on financial statements. #### Duration: 60 minutes #### Materials Needed: - Whiteboard and markers - Projector and computer - Financial accounting textbooks - Handouts with sample depreciation problems - Calculator #### Lesson Breakdown: **1. Introduction (5 minutes)** - Brief recap of Depreciation concepts covered in previous lessons. - Definition of Depreciation - Importance of Depreciation in Financial Reporting - Overview of methods of depreciation (Straight-Line, Declining Balance, Sum-of-Years-Digits, Units of Production) **2. Review of Depreciation Methods (10 minutes)** - Straight-Line Method: Depreciation is evenly spread across the useful life of the asset. - Formula: (Cost of Asset - Residual Value) / Useful Life - Declining Balance Method: Higher depreciation in the earlier years. - Formula: Book Value at Beginning of Year * Depreciation Rate - Units of Production Method: Depreciation based on usage or output. - Formula: (Cost of Asset - Residual Value) / Total Estimated Production * Actual Production - Sum-of-Years-Digits Method: Different annual depreciation expenses based on the sum of the years. - Formula: (Remaining Life of Asset / Sum of the Years Digits) * (Cost of Asset - Residual Value) **3. Practical Application of Depreciation Methods (20 minutes)** - Work through a Straight-Line Method example, e.g., Depreciating a machine bought for $10,000 with a residual value of $1,000 and a useful life of 10 years. - Work through a Declining Balance Method example, e.g., Depreciating a vehicle with an initial cost of $15,000 using a 20% declining balance rate. - Work through a Units of Production Example, e.g., Depreciating factory equipment with an initial cost of $50,000 to be used for 10,000 units of production over its lifetime. - Work through a Sum-of-Years-Digits Method example, e.g., Depreciating a computer system bought for $6,000 with a useful life of 3 years. **4. Interactive Class Activity (15 minutes)** - Divide students into small groups and provide each group with different example problems for each method. - Have students calculate depreciation for the first year using the method assigned to their group. - Groups will present their calculations and methods to the class. **5. Impact of Depreciation on Financial Statements (5 minutes)** - Explain how depreciation affects the income statement and balance sheet. - Discuss the importance of accurate depreciation calculation for financial reporting and tax purposes. **6. Q&A and Recap (5 minutes)** - Open the floor to any questions the students might have. - Summarize key points and clarify any misunderstandings. **7. Homework Assignment (Handout) (5 minutes)** - Distribute a worksheet with a mix of problems requiring the use of different depreciation methods. - Provide due date and expectations for the homework. #### Assessment: - Group presentations and participation. - Accuracy of calculations in the class activity. - Completion and correctness of the homework assignment. #### Extension Activity: - Encourage students to research how different companies report depreciation in their financial statements. - Discuss depreciation policies of different industries in a future lesson. This lesson plan provides an extensive overview of depreciation, its methods, and its impact on financial statements, combining theoretical understanding with practical applications.