NonAccelerated Depreciation Methods Flashcards Preview

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Flashcards in NonAccelerated Depreciation Methods Deck (11):
1

Define "Book Value"

Original Cost less A/D to date

2

What type of allocation is depreciation considered?

Systematic and rational allocation of capitalized asset cost to time periods

3

List the non-accelerated methods of depreciation

1.) Straight Line
2.) Service Hours Method
3.) Units of output method

4

How do we calculate the annual straight-line depreciation amount of an asset?

(Cost-salvage value)/Useful Life

5

Depreciation is included in overhead and allocated to production based on machine hours or direct labors for what type of asset?

Manufacturing assets

6

How is depreciation based on service hours calculated?

-Depreciation rate x service hours used
-Depreciation rate = (Cost-salvage value)/estimated hours

7

What is the justification of the Straight line method of depreciation?

The asset will provide essentially the same benefits per year.

8

What is the justification of the Service hours method of depreciation?

Asset will provide essentially the same benefits per service hour. A delivery vehicle is an example

9

What is the justification of the Unit of Output method of depreciation?

The asset will provide essentially the same benefit per service hour. oil drilling equipment is an example.

10

How is depreciation on the Units of Output Method calculated?

Depreciation Rate = (Cost-Salvage Value)/(Useful life in units of production)
-Depreciation rate x units of production

11

What 4 factors affect the amount of depreciation recognized in each period?

1.) Capitalized cost - only definite amount among factors
2.) Estimated useful life
3.) Estimated Salvage value
4.) Method Chosen

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