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ch11 - CHAPTER 11 11 DEPRECIATION IMPAIRMENTS DEPRECIATION...

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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-termassets: Fixed assets = Depreciation expense Intangibles = Amortization expense Natural resources = Depletion expense Depreciation is theprocess of allocating the cost of tangibleassets to expense in a systematic and rational manner to thoseperiods expected to benefit from the useof the asset (based on thematching principle). Depreciation - Method of Cost Allocation Depreciation - Method of Cost Allocation LO 1 Explain theconcept of depreciation. LO 1 Explain theconcept of depreciation.
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Chapter 11-3 Factors Involved in the Depreciation Process LO 2 Identify thefactors involved in thedepreciation process. LO 2 Identify thefactors involved in thedepreciation process. 1. Depreciable Base 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 Servicelifeof an asset often differs fromits physical life. Companies retireassets 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 Compareactivity, straight-line, and decreasing-chargemethods of LO 3 Compareactivity, straight-line, and decreasing-chargemethods of depreciation. depreciation. 3. Depreciation method Has to besystematic 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 Factors Involved in theDepreciation Process Factors Involved in theDepreciation Process
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Chapter 11-6 Activity Method Illustration 11-2 If Stanley uses thecranefor 4,000 hours thefirst year, thedepreciation charge is: Illustration 11-3 Illustration 11-3 Depreciation Methods Depreciation Methods
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Chapter 11-7 Straight-LineMethod Illustration 11-2 Illustration 11-2 Illustration 11-4 Factors Involved in theDepreciation Process Factors Involved in theDepreciation 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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Chapter 11-9 Declining-BalanceMethod Illustration 11-7 Illustration 11-7 Depreciation Methods Depreciation Methods Utilizes a depreciation ratethat is some multipleof the straight-line method. Does not consider salvage valuein computing the depreciation base.
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Chapter 11-10 E11-5 (Depreciation Computations—Four Methods):   KC Corporation purchased a new machine for its assembly process on August 1, 2010. Thecost of this machinewas $150,000. The company estimated that the machine has a salvage value of $24,000 at the end of its service life. Its lifeis estimated at 5 years and its working hours at 21,000 hours.
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