Active learning ideas
Property, Plant and Equipment (PPE) represents the long-term investments a business makes to generate income. Students learn to distinguish between capital and revenue expenditure, ensuring that only costs that provide future economic benefits are recorded as assets. This distinction is vital for accurate profit reporting over several years.
Activity 01
Post photos of business costs (e.g., a new engine vs. a petrol bill). Students walk around and tag each as 'Capital' or 'Revenue', justifying their choice to a partner.
What costs are capitalised as Property, Plant and Equipment?
Activity 02
Groups are given a high-tech asset (like a laptop) and a low-tech asset (like a desk). They must calculate depreciation using two methods and argue which method best reflects the asset's 'wear and tear'.
How does depreciation reflect the consumption of economic benefits?
Activity 03
Students track an asset from purchase to disposal. They must record the initial cost, annual depreciation, and the final gain or loss when the asset is 'sold' at the end of the simulation.
How are gains or losses on the disposal of non-current assets recorded?
A few notes on teaching this unit
Watch Out for These Misconceptions
Depreciation is a way to set aside cash to replace the asset.
Depreciation is an allocation of cost, not a cash fund. Peer discussion about the 'Statement of Cash Flows' later in the course helps clarify that depreciation is a non-cash expense.
The net book value is the same as the market value.
Net book value is simply cost minus accumulated depreciation; it does not reflect what the asset could be sold for today. Comparing real-world car depreciation to accounting schedules helps surface this error.
Methods used in this brief
Inventory Valuation
Focuses on the valuation of inventory using FIFO and weighted average cost formulas. Students will understand the impact of inventory valuation on a company's reported profitability.
8 methodologies
Trade Receivables and Impairment
Addresses the accounting treatment for trade receivables and the allowance for impairment of receivables. Students will analyse the impact of bad debts on financial statements.
8 methodologies