Grammar check. Task 1. Put the verb 'to apply' in the forms of Indefinite, Continuous Groups of Tenses

Task 1. Put the verb 'to apply' in the forms of Indefinite, Continuous Groups of Tenses.

Score: 5

Total score: 50 points

UNIT IV

Task 1. Remember the meaning of these words and word-combinations:

fixed assets – основні фонди (капітал)

matching convention – збалансована угода

to write off – повністю списувати з рахунку

depreciation – обезцінювання, амортизація

depreciation charge – сума нарахованого зношування

historic cost – початкова вартість

scrap value – вартість лому (брухту)

estimated residual value – обчислена залишкова вартість основного капіталу

inherent – притаманний, невід'ємний

wear and tear – зношування основних коштів

obsolescence – зношування, устаріння

straight-line basis depreciation – амортизація на основі без­посереднього використання

accelerated depreciation – амортизація швидкісного використання

annuity method of depreciation – метод ануїтету при нараху­ванні зношування

interest costs – процентні затрати.

Score: 15

Task 2. Read and translate the text.

Text

Tax accounting
Methods of depreciation

By definition, fixed assets are those which will provide services over a number of years and the matching convention tells us that we should recognize the expense in the same period as we recognize the associated revenue. Thus we must not write off, or expense, the whole cost of the asset in the period in which the asset is acquired, but should instead convert the asset into an expense over its life. This gradual conversion is known as depreciation.

How should we compute the depreciation charge for each year? An obvious way would be to compare the current value of an asset at the end of the year with its value at the start of the year and say that the difference is depreciation. But as we have already emphasized, traditional accounting practice is based on historic cost and not current values; consequently that method is generally not acceptable. The traditional approach is to estimate the total expenditure is to estimate the total expenditure to be written off, i.e. the cost of the asset less its estimated scrap value, and then to write off that expenditure over the estimated life of the asset by using one of the methods that we shall describe. It would be helpful to look at a simple example. If a firm purchased a machine on 1 January 2000 for $ 22,000, which is expected to last for four years and then be sold for $ 2,000:

Cost $ 22000

Estimated residual value $ 2,000

Amount to be written off over 4 years $ 20,000

The life of the asset is usually measured in time, but in some instances may be measured on the basis of actual usage.

Depreciation on the basis of 'actual usage' is rare. In order to consider the difficulties inherent in estimating the life of an asset we should think about the reasons why most fixed assets, other than land, have a limited life. These reasons may be classified as physical wear and tear, and obsolescence. Obsolescence may be of the asset itself, e.g. a new machine may make the use of the original asset, an older machine, uneconomic because the new machine is faster or requires less labor. Obsolescence may also be caused by the object produced by the asset, if, for example, it goes out of fashion. In the latter case, the degree of obsolescence will depend on the specific nature of the asset; some assets may be easily adapted to alternative uses while others may have only one use, the original.

None of the above variables can be determined with any accuracy; obsolescence, in particular, is rapidly increasing in importance because of rapid changes in technology.

Deciding how much should be written off and over what period is not the only problem for there are a number of depreciation methods from which to choose. A firm's management must decide which one to employ, and a user of financial statements who wishes to compare the financial performance of a number of companies must appreciate the effects of the various methods.

In practice we find two main methods of depreciation – the straight-line basis and accelerated depreciation. There is another method, the annuity method which takes account of the interest costs involved in investing in a long-lived asset; this method has many theoretical attractions but is rarely used.

Score: 15

Vocabulary check

Task 1. Translate into English.

Повністю списувати з рахунку; придбати, здобувати; зношування основних коштів; устаріння; послідовний перехід; початкова вартість; обчислена залишкова вартість основного капіталу; бути причиною чогось; процентні затрати; збалансована угода.

Score: 5

Task 2. Look at how the following words are used in the text. Then put each word into one of the sentences below, using the correct grammatical form. Try to do this exercise without a dictionary.

I. Usually obsolescent machinery has to be_______.

II. Trying to_______ future costs at a time of growing inflation is

difficult.

III. Rules which are generally followed but are not obligatory are __

IV. Given their shortage, of foreign exchange, there are ______

difficulties in trading with Eastern Europe.

V. ______ the taxes of self-employed workers can be very complex.

VI. Any sensible system of taxation must ________ the need to

encourage business enterprise.

VII. The difficulties of exporting are sometimes hot _______ by companies wishing to expand.

VIII. _ Together with the income produced by a new product there are
____ costs.

IX. Owing to its inefficient management, the company____ debts of $ 10,000,000 to now.

X. After a company has paid a divided there is a__ amount known as retained profits.

Score: 10

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