Flashcards in NonAccelerated Depreciation Methods Deck (11):
Define "Book Value"
Original Cost less A/D to date
What type of allocation is depreciation considered?
Systematic and rational allocation of capitalized asset cost to time periods
List the non-accelerated methods of depreciation
1.) Straight Line
2.) Service Hours Method
3.) Units of output method
How do we calculate the annual straight-line depreciation amount of an asset?
(Cost-salvage value)/Useful Life
Depreciation is included in overhead and allocated to production based on machine hours or direct labors for what type of asset?
How is depreciation based on service hours calculated?
-Depreciation rate x service hours used
-Depreciation rate = (Cost-salvage value)/estimated hours
What is the justification of the Straight line method of depreciation?
The asset will provide essentially the same benefits per year.
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
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.
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