Final answer:
The depreciation charge for a reporting period involves factors such as the asset's cost, expected useful life, residual value, and the chosen method of depreciation.
Step-by-step explanation:
When calculating the depreciation charge for a reporting period, several factors must be taken into account. These factors include the cost of the asset, its expected useful life, the residual value at the end of its useful life, and the method of depreciation selected.
The cost of the asset represents the initial value that will be depreciated over time. The estimated useful life is the period over which the asset is expected to be used by the company.
The residual or salvage value reflects the expected value of the asset at the end of its useful life, subtracted from the cost before calculating depreciation. Lastly, the method of depreciation, whether straight-line, double-declining balance, or units of production, will determine how the depreciation expense is allocated over the asset's useful life.