Bale and Co. have purchased a number of fixed assets and at the end of the first month's trading they just accepted the fact that since they still owned the assets they were properly disclosed in the balance sheet at the original cost. Now that Azina has had more time to look at the figures, she realized that this needs some more thought. We've bought all this furniture and equipment but it will not last forever. I know we should be charging depreciation to account for the use we have made of them but I don't know how to go about working out how much is involved or how to record it. Then there's the shop. Do we need to make a charge for using that?" Johm didn't know what depreciation meant but agreed that it seemed reasonable they should make some charge for the assets they were using when they calculated the profit. He was not so sure about the building however. I hope that the property will be worth a bit more in a few years time,' he said, 'It should give us a nice lump sum when we retire!" Azina had another look at the accounts. As far as she could tell the fixed assets included: Shop Carpets Desks, chairs and office furniture Second-hand shop equipment Computer purchased in December Vehicle 100 000.00 1 280.60 4 631.20 1 558.32 2 483.00 6.000.00 She knew how much they had cost the business but what were they worth now? And did it matter what they were worth? Azina had heard the term depreciation used in class but in the example used she had been told how long the asset was going to last and what it would be sold for at the end of its life. It was a bit different when you had to decide all this for yourself. She decided to read the notes she had made in class and then go and see her tutor for some advice.