ch11 - CHAPTER 11 11 DEPRECIATION, IMPAIRMENTS,...

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Chapter 11-1 C H A P T E R C H A P T E R 11 11 DEPRECIATION, IMPAIRMENTS, DEPRECIATION, IMPAIRMENTS, AND DEPLETION AND DEPLETION Intermediate Accounting I Intermediate Accounting I Prof. Volkan Muslu Prof. Volkan Muslu
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Chapter 11-2 Allocating costs of long-term assets: Fixed assets = Depreciation expense Intangibles = Amortization expense Natural resources = Depletion expense Depreciation is the process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset (based on the matching principle). Depreciation - Method of Cost Allocation Depreciation - Method of Cost Allocation LO 1 Explain the concept of depreciation. LO 1 Explain the concept of depreciation.
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Chapter 11-3 Factors Involved in the Depreciation Process LO 2 Identify the factors involved in the depreciation process. LO 2 Identify the factors involved in the depreciation process. 1. Depreciable Base Illustration 11-1 Illustration 11-1
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Chapter 11-4 Factors Involved in the Depreciation Process Factors Involved in the Depreciation Process 2. Useful (Service) Life Service life of an asset often differs from its physical life. Companies retire assets for two reasons: physical factors (such as casualty or expiration of physical life), and economic factors (obsolescence).
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Chapter 11-5 LO 3 Compare activity, straight-line, and decreasing-charge methods of LO 3 Compare activity, straight-line, and decreasing-charge methods of depreciation. depreciation. 3. Depreciation method Has to be systematic and rational (1) Activity method (units of use or production). (2) Straight-line method. (3) Sum-of-the-years’-digits. (4) Declining-balance method. (5) Group and composite methods. (6) Hybrid or combination methods. Accelerated methods Accelerated methods Special methods Special methods Factors Involved in the Depreciation Process Factors Involved in the Depreciation Process
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Chapter 11-6 Activity Method Illustration 11-2 Illustration 11-2 If Stanley uses the crane for 4,000 hours the first year, the depreciation charge is: Illustration 11-3 Depreciation Methods Depreciation Methods
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Chapter 11-7 Straight-Line Method Illustration 11-2 Illustration 11-2 Illustration 11-4 Illustration 11-4 Factors Involved in the Depreciation Process Factors Involved in the Depreciation Process Depreciation Methods Depreciation Methods
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Chapter 11-8 Sum-of-the-Years’-Digits Illustration 11-6 Illustration 11-6 Depreciation Methods Depreciation Methods Illustration 11-2 Illustration 11-2
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11-9 Declining-Balance Method Illustration 11-7 Illustration 11-7 Depreciation Methods Depreciation Methods Utilizes a depreciation rate that is some multiple of the straight-line method. Does not consider salvage value in computing the depreciation base.
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This note was uploaded on 02/14/2011 for the course AIM 6330 taught by Professor Volkanmuslu during the Spring '10 term at University of Texas at Dallas, Richardson.

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ch11 - CHAPTER 11 11 DEPRECIATION, IMPAIRMENTS,...

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