## Lesson Plan: Depreciation of Fixed Assets
### Subject: Financial Accounting
### Grade: Senior Secondary 2
### Duration: 60 minutes
### Topic: Depreciation of Fixed Assets
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### Objectives:
By the end of the lesson, students will be able to:
1. Define depreciation and understand its purpose in financial accounting.
2. Identify different methods of calculating depreciation.
3. Apply the straight-line method and the declining balance method to calculate depreciation.
4. Understand the impact of depreciation on financial statements.
### Materials Needed:
- Whiteboard and markers
- Handouts with depreciation problems and financial statement examples
- Calculator
- Projector and screen (optional for multimedia presentation)
### Lesson Outline:
**1. Introduction and Review (10 minutes)**
- Briefly review the concept of fixed assets and why they are important for a business.
- Introduce the concept of depreciation, emphasizing that fixed assets lose value over time due to wear and tear, obsolescence, and usage.
- Define key terms: Depreciation, Accumulated Depreciation, Salvage Value, Useful Life.
**2. Purpose of Depreciation (5 minutes)**
- Discuss why businesses need to account for depreciation.
- Explain how depreciation affects profit and loss statements and balance sheets.
- Emphasize compliance with accounting standards and tax regulations.
**3. Methods of Calculating Depreciation (15 minutes)**
- Introduce the main methods of calculating depreciation.
- **Straight-Line Method**
- **Declining Balance Method**
- Provide detailed explanations and formulas.
- Straight-Line Method Formula: (Cost - Salvage Value) / Useful Life
- Declining Balance Method Formula: Book Value at Beginning of Year × Depreciation Rate
**4. Example Problems (15 minutes)**
- Distribute handouts with example problems.
- Walk through a straight-line depreciation example step-by-step.
- Solve a declining balance depreciation problem step-by-step.
- Ensure students are following along and ask for volunteers to assist with the calculations on the board.
**5. Group Activity (10 minutes)**
- Divide the class into small groups.
- Provide each group with a different depreciation problem to solve using either the straight-line or declining balance method.
- Allow groups to present their solutions and reasoning to the class.
**6. Impact on Financial Statements (10 minutes)**
- Discuss how depreciation is recorded in the profit and loss statement as an expense.
- Explain the concept of accumulated depreciation on the balance sheet and demonstrate its presentation.
- Show an example of financial statements before and after accounting for depreciation.
**7. Recap and Q&A (5 minutes)**
- Summarize key points of the lesson.
- Ask a few students to explain what they learned about depreciation.
- Open the floor for questions and additional clarification.
**8. Homework Assignment**
- Assign homework problems involving different types of fixed assets and methods of depreciation to reinforce the lesson.
- Provide a case study for students to analyze how depreciation affects a company’s overall financial health.
### Assessment:
- Observe student participation and understanding during the group activity and class discussion.
- Evaluate the accuracy and completeness of the homework assignment.
### References:
- Financial Accounting textbooks and resource materials.
- Handout with depreciation problems and examples.
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This lesson plan ensures students grasp the concept of depreciation and can apply it practically in financial accounting scenarios.