Class: Senior Secondary School 1 (SS1, SS 1, SSS1, SSS 1)
Term: Third Term
Week: 7
Age: 15 years
Duration: 45 minutes
Subject: Financial Accounting
Curriculum Theme: Financial Accounting
Previous Lesson: Control Account II.
Topic: DEPRECIATION ACCOUNT
Subject Matter: meaning of depreciation, reasons for charging depreciation, causes of depreciation, methods of depreciation, depreciation terminologies

Specific Objectives

By the end of the lesson, pupils should be able to:

Cognitive Domain:

Define depreciation.
State at least three reasons for charging depreciation.
Identify and explain at least three causes of depreciation.
Mention two common methods of depreciation.
Explain key depreciation terminologies.

Affective Domain:

Appreciate the importance of calculating depreciation in financial reporting.
Show interest in learning how to account for depreciation.

Psychomotor Domain:

Calculate simple depreciation using basic methods.
Prepare a simple depreciation schedule.

Participate actively in group discussions about depreciation.

Reference Materials

The following resources were used in planning this lesson:

Senior Secondary Education Curriculum for Financial Accounting.
State Unified Scheme of Work for Senior Secondary Schools.
Ike, A. (2018). Financial Accounting for Senior Secondary Schools, Book 1. Learn Africa Plc.

Instructional Materials

The teacher will teach this lesson with the aid of:

Charts illustrating fixed assets and their value over time.
Whiteboard and markers.
Textbooks and notebooks.

Rationale for the Lesson

This lesson helps pupils understand how the value of assets decreases over time, which is important for preparing accurate financial statements. It enables pupils to properly account for the wear and tear of assets used in a business.

Prerequisite/Previous Knowledge

Pupils have basic knowledge of fixed assets, their importance to a business, and the concept of business expenses from previous lessons.

Lesson Content/Board Summary

DEPRECIATION ACCOUNT

Meaning of Depreciation

Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. It represents the fall in the value of a fixed asset due to its usage, wear and tear, or the passage of time.

Reasons for Charging Depreciation

The following are reasons for charging depreciation:

To ascertain the true profit or loss of a business.
To show the true and fair value of assets in the balance sheet.
To provide funds for the replacement of assets.
To comply with accounting standards and principles (e.g., matching principle).
To reduce tax liability.

Causes of Depreciation

The following are causes of depreciation:

Wear and Tear: Physical deterioration of an asset due to its regular use.
Obsolescence: An asset becoming outdated or inefficient due to new inventions, technology, or changes in fashion.
Passage of Time/Effluxion of Time: The value of an asset diminishes simply with the passage of time, even if not actively used (e.g., leases, patents).
Depletion: Reduction in the value of natural resources (e.g., mines, quarries) as they are extracted.
Inadequacy: An asset becoming too small or unsuitable for the growing needs of the business.

Methods of Depreciation

The following are common methods of depreciation:

Straight Line Method
Reducing Balance Method
Sum of the Years’ Digits Method
Units of Production Method

Depreciation Terminologies

The following are important terms related to depreciation:

Original Cost: The initial purchase price of an asset, including all costs incurred to bring it to its working condition.
Residual Value (Scrap Value/Salvage Value): The estimated amount that an entity would currently obtain from disposal of an asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.
Useful Life: The estimated period over which an asset is expected to be available for use by an entity, or the number of production or similar units expected to be obtained from the asset by an entity.
Depreciable Amount: The cost of an asset or other amount substituted for cost, less its residual value.
Accumulated Depreciation: The total amount of depreciation expense that has been recorded for an asset since it was put into use.
Carrying Amount (Net Book Value): The amount at which an asset is recognised in the balance sheet after deducting any accumulated depreciation and accumulated impairment losses.

Teaching Methods/Instructional Techniques

Discussion, Lecture, Demonstration, Question and Answer, Visual Aids

Instructional Procedures

Step 1: Introduction

Time: 5 minutes
Teaching Skill: Set Induction
Teacher’s Activity: The teacher greets the pupils and asks them to recall what fixed assets are and gives examples. The teacher then introduces the topic “Depreciation Account” by asking pupils if they think the value of a car or a building remains the same over many years.
Pupils’ Activity: Pupils respond by mentioning fixed assets like land, buildings, machinery, and vehicles. They discuss whether asset values remain constant.
Learning Point: Pupils recall previous knowledge and are introduced to the concept of depreciation.

Step 2: Meaning and Reasons for Charging Depreciation

Time: 10 minutes
Teaching Skill: Explanation/Illustration
Teacher’s Activity: The teacher defines depreciation and explains the key reasons why businesses charge depreciation, listing them on the board.
Pupils’ Activity: Pupils listen attentively, ask questions for clarity, and take notes.
Learning Point: Pupils understand the definition of depreciation and its importance.

Step 3: Causes of Depreciation

Time: 8 minutes
Teaching Skill: Discussion/Elaboration
Teacher’s Activity: The teacher discusses the various causes of depreciation, such as wear and tear, obsolescence, and effluxion of time, providing examples for each.
Pupils’ Activity: Pupils contribute to the discussion, share their understanding, and write down the points.
Learning Point: Pupils identify and understand the factors that lead to the decrease in asset value.

Step 4: Methods of Depreciation

Time: 7 minutes
Teaching Skill: Listing/Briefing
Teacher’s Activity: The teacher introduces the common methods used to calculate depreciation, specifically mentioning the Straight Line Method and Reducing Balance Method as key ones for their level.
Pupils’ Activity: Pupils listen and note the names of the depreciation methods.
Learning Point: Pupils become aware of the different approaches to calculating depreciation.

Step 5: Depreciation Terminologies

Time: 7 minutes
Teaching Skill: Definition/Clarification
Teacher’s Activity: The teacher explains important terms associated with depreciation, such as original cost, residual value, useful life, and accumulated depreciation, using the charts if available.
Pupils’ Activity: Pupils pay attention, ask for clarification on new terms, and record the definitions in their notebooks.
Learning Point: Pupils learn the specific vocabulary used in depreciation accounting.

Step 6: Class Activity/Reinforcement

Time: 3 minutes
Teaching Skill: Guided Practice
Teacher’s Activity: The teacher asks pupils to briefly explain any two reasons for charging depreciation to a partner sitting next to them.
Pupils’ Activity: Pupils discuss with their partners and share their understanding.
Learning Point: Pupils reinforce their learning through peer interaction.

Step 7: Evaluation/Review

Time: 5 minutes

Teaching Skill: Questioning/Assessment

Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

Define depreciation in your own words.
Mention three reasons why a business charges depreciation.
List any three causes of depreciation.
Explain the meaning of “residual value” and “accumulated depreciation”.

Pupils’ Activity: Pupils answer orally and in writing.

Learning Point: Pupils demonstrate understanding of the lesson.

Step 8: Conclusion

Time: 2 minutes
Teaching Skill: Summarization/Assignment
Teacher’s Activity: The teacher summarizes the main points of the lesson, emphasizing the importance of depreciation in financial accounting. The teacher then gives homework: “Research and briefly explain the Straight Line Method and Reducing Balance Method of depreciation.”
Pupils’ Activity: Pupils listen to the summary and copy down the homework.
Learning Point: Pupils consolidate their learning and prepare for the next lesson.

Lesson Keywords

Depreciation – The decrease in the value of an asset over time.
Fixed Assets – Long-term tangible assets used in a business.
Wear and Tear – Physical damage from use.
Obsolescence – When an asset becomes outdated.
Residual Value – Estimated value of an asset at the end of its useful life.
Useful Life – Period an asset is expected to be used.
Accumulated Depreciation – Total depreciation charged to date.
Carrying Amount – Asset’s value after deducting accumulated depreciation.

Differentiation

For pupils who grasp concepts quickly, the teacher can provide additional examples of assets and ask them to identify potential causes of depreciation. For pupils needing more support, the teacher will use more visual aids and repeat explanations, encouraging them to ask questions in smaller groups.

Note for teachers using this lesson plan

Ensure that the charts used are clear and relevant to the Nigerian context. Encourage pupils to relate the concepts of depreciation to everyday items they own or observe. Emphasize that depreciation is an estimate and not an exact measure of market value decline.