fixed assets - 2009-10-061FIXED ASSETS2009-10-06Fixed...

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Unformatted text preview: 2009-10-061FIXED ASSETS2009-10-06Fixed Assets Topic Slides2Common Amortization MethodscStraight-line methodcUnits-of-production methodcDeclining-balance methodcDouble-declining balance method2009-10-0622009-10-06Fixed Assets Topic Slides3Straight-line Method2009-10-06Fixed Assets Topic Slides4Units-of-production MethodcThis method is also referred to as units-of-output, orunits-of-activity.Note:Calendar time that an asset is in use does not matter when calculating amortization using the units-of-production method. 2009-10-0632009-10-06Fixed Assets Topic Slides5Declining-balance MethodAssuming a 12-month accounting period:Note:Must not amortize past the salvage value.2009-10-06Fixed Assets Topic Slides6Double-declining-balance methodAssuming a 12-month accounting period:Note:Must not amortize past the salvage value.2009-10-064Example: Double-declining-balance AmortizationcAssume a corporation purchases a new computer for $12,000 on January 1, 2004.cThe computer has a useful life of 4 years with a salvage value of $900 to be amortized using DDB:2009-10-06Fixed Assets Topic Slides7cUsing the formula, the first years amortization expense (assuming a December 31, 2004, year-end) would be:Example (cont.): Double-declining-balance AmortizationcFollowing the same process, amortization calculations for the first 4 years are as follows:2009-10-06Fixed Assets Topic Slides8cHowever, we cannot amortize past the $900 salvage value.2009-10-06...
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This note was uploaded on 11/09/2010 for the course BUSINESS 2257 taught by Professor Iandunn during the Fall '10 term at UWO.

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fixed assets - 2009-10-061FIXED ASSETS2009-10-06Fixed...

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