{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Ch11 - Engineering Economic Analysis 9th Edition Chapter 11...

Info icon This preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Engineering Economic Analysis - Ninth Edition Newnan/Eschenbach/Lavelle Copyright 2004 by Oxford University Press, Inc. 1 Engineering Economic Analysis 9th Edition Chapter 11 DEPRECIATION
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Engineering Economic Analysis - Ninth Edition Newnan/Eschenbach/Lavelle Copyright 2004 by Oxford University Press, Inc. 2 Depreciation is the systematic allocation of the cost of an asset spread over its depreciable life. Basic Aspects of Depreciation An important component in computing income taxes. For tax purposes:
Image of page 2
Engineering Economic Analysis - Ninth Edition Newnan/Eschenbach/Lavelle Copyright 2004 by Oxford University Press, Inc. 3 Depreciation In an economic context Definition: A decrease in value Market value Value to the owner In an accounting context Definition: a systematic allocation of the cost of an asset over its depreciable life. Related to Deterioration Obsolescence
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Engineering Economic Analysis - Ninth Edition Newnan/Eschenbach/Lavelle Copyright 2004 by Oxford University Press, Inc. 4 Depreciation and Expenses Expenses: subtracted from business revenues as they occur. Labor Utilities Materials Insurance, etc. Depreciation: subtracted from business expenses over time as the asset is used up. Machinery Installation costs
Image of page 4
Engineering Economic Analysis - Ninth Edition Newnan/Eschenbach/Lavelle Copyright 2004 by Oxford University Press, Inc. 5 Depreciation for Tax Purposes Depreciable life: the period over which an asset is depreciated (recovery period). Depreciation is a non-cash cost: money does not change hands during the recovery period. Depreciation is used to allocate an asset’s loss of value over time. Depreciation is deducted from revenue and reduces the taxable income of a business over time. Depreciation is a cash flow on an after tax-basis.
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Engineering Economic Analysis - Ninth Edition Newnan/Eschenbach/Lavelle Copyright 2004 by Oxford University Press, Inc. 6 A Property is Depreciable If
Image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern