Flashcards in Depreciable Assets and Depreciation Deck (12):
What is the basic principle of matching revenue and expenses applied to?
Long-lived assets that are not held for sale in the ordinary course of business
What are the 2 types of depreciation?
Physical and functional
What is the type of depreciation related to an asset's deterioration and wear over a period of time?
What is the type of depreciation arising from obsolecence or inadequacy of the asset to perform efficiently?
What is an estimate of the amount that will be realized at the end of the useful life of a depreciable asset?
What is an advantage of component depreciation over composite depreciation?
Depreciation expense for the year would be more accurate because each component item would be depreciated over its useful life
Is a gain or loss recognized when one asset in a group is retired?
What is the formula for straight line depreciation?
(Cost - salvage value) / estimated useful life
What is the formula for sum-of-the-years'-digits?
(Cost - salvage value) x (remaining life of asset/sum of the years digits)
What is the formula for double-declining balance depreciation?
2 x(1/n) x (Cost - Acccumulated depreciation)
What is the formula for units-of-production method?
Step 1: (Cost - Salvage value)/Estimated units or hours = Rate per unit or hour, Step 2: Rate per unit(or hour) x # of units produced(or hours worked) = depreciation expense