Assets - PP&E and Inventory

Assets - PP&E and Inventory - Assets PP&E and...

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Assets – PP&E and Inventory
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Long-Term Assets Long-term assets mainly consist of property, plant, and equipment (PP&E). PP&E is often the largest asset on the balance sheet. Future expenses arising from these long- term assets often make up the larger expense amounts—typically reflected in depreciation expense and asset write- downs.
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Depreciation Depreciation requires the following estimates: 1. Useful life – period of time over which the asset is expected to generate cash inflows 2. Salvage value – Expected disposal amount for the asset at the end of its useful life 3. Depreciation rate – an estimate of how the asset will be used up over its useful life.
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Depreciation Variation A company can depreciate different assets using different depreciation rates (and different useful lives). Different companies can also depreciate the same asset using different depreciation rates and useful lives. The using up of an asset generally relates to physical or technological obsolescence.
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Depreciation Methods All depreciation methods have the following general formula: Depreciation Expense = Beginning Asset Value x Depreciation Rate Depreciation Methods: 1.
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Assets - PP&E and Inventory - Assets PP&E and...

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