EFFECT OF DEPRECIATION PRACTICES ON THE VALUE OF ASSETS OF FEDERAL OWNED TERTIARY INSTITUTIONS IN EBONYI STATE, NIGERIA

Abstract

The study evaluated the effect of depreciation practices on the value of assets of federal owned tertiary institutions (FOTI) in Ebonyi State. Specifically the study sought to examine the effect of straight line method (SLM), reducing balance method (RBM), sum-of-the-years’ digits method (SOTYDM) and revaluation method (REM) of calculating depreciation. The study adopted descriptive survey design which enabled primary data to be collected with the aid of structured questionnaire in 5 point linkert scale of very highly impacted (VHI), highly impacted (HI), moderately impacted (MI), lowly impacted (LI) and very lowly impacted (VLI). The population of the study was 135 respondents drawn from four FOTI in the State. The same 135 population were used as the sample size and 135 copies of questionnaire were administered to the targeted participants but only 126 were successfully returned for analysis. Descriptive statistics was applied to determine the characteristics of the model variables. Moreover, OLS linear multiple regression model was employed to test hypotheses at 5% level of significance. Result of the regression analysis revealed that SLM, RBM, SOTYDM and REM had positive and significant effect on depreciable assets of the sampled institutions. The implication of these findings is that, provision made for depreciation by the selected tertiary institutions had significantly enhanced the assets of these institutions. The study therefore recommends that each institution should maintain their type of depreciation practices in order to sustain the enhancement of their assets values as well as complementing the assets’ renewal and replacement at the expiration of their serviceable life.