04-04-12Class22 EndCh11 begin Ch 16 dilutive secb

Deprec 1 26 000 j our nal ent r y 2010 depr eciat ion

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Unformatted text preview: 000 / 2 014 126, 000 2 015 126, 000 Years Current Year Expense Part ial Year x 10, 500 $ 1 0, 500 25, 200 2 5, 200 3 5, 700 = 25, 200 2 5, 200 6 0, 900 5 = 25, 200 2 5, 200 8 6, 100 / 5 = 25, 200 2 5, 200 1 11, 300 / 5 = 25, 200 14, 700 1 26, 000 x 5/ 12 7/ 12 = = $ Accum. Deprec. $ 1 26, 000 J our nal ent r y: 2010 Depr eciat ion expense 10, 500 Accumult at ed depr eciat ion Chapter 18-21 10, 500 LO 3 Compare activity, straight-line, and decreasingcharge methods of depreciation. Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation Depreciation Activity Method (Assume 800 hours used in 2010) ($ 126, 000 / 21, 000 hours = $ 6 per hour) Year (Given) Hours Used 2010 800 Rat e per Hours x $6 Annual Expense = 2 011 x x x x 4 , 800 $ $ 4 , 800 4 , 800 = 2014 $ = 2013 4, 800 Accum. Deprec. = 2012 $ Part ial Year Current Year Expense = 800 J ournal ent ry: 2010 Depreciat ion expense Accumult at ed depreciat ion Chapter 18-22 4, 800 4, 800 LO 3 Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation 5/12 = .416667 7/12 = .583333 Sum-of-the-Years’-Digits Method Current Year Depreciable Base 2010 $ 126, 000 x 2 011 126, 000 2 012 Annual Expense Years 5/ 15 = 42, 000 x 4. 58/ 15 = 126, 000 x 2 013 126, 000 2 014 2 015 Part ial Year 5/ 12 $ Accum. Deprec. 17, 500 $ 1 7, 500 38, 500 3 8, 500 5 6, 000 3. 58/ 15 = 30, 100 3 0, 100 8 6, 100 x 2. 58/ 15 = 21, 700 2 1, 700 1 07, 800 126, 000 x 1. 58/ 15 = 13, 300 1 3, 300 1 21, 100 126, 000 x . 58/ 15 4, 900 4 , 900 1 26, 000 = x Year Expense $ 1 26, 000 J our nal ent r y: 2010 Chapter 18-23 Depr eciat ion expense Accumult at ed depr eciat ion 17, 500 17, 500 LO 3 LO Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation Special Depreciation Methods The choice of method depends on the nature of the assets involved: Group method used when the assets are similar in nature and have approximately the same useful lives. Composite approach used when the assets are dissimilar and have different lives. Companies are also free to develop tailor­made depreciation methods, provided the method results in the allocation of an asset’s cost in a systematic and rational manner (Hybrid or Combination Methods). Chapter 18-24 LO 4 Explain special depreciation methods. Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation Special Depreciation Issues (1) How should companies compute depreciation for partial periods? Companies normally compute depreciation on the basis of the nearest full month. (1) Does depreciation provide for the replacement of assets? Funds for the replacement of the assets come from the revenues (1) Chapter 18-25 How should companies handle revisions in depreciation rates? LO 4 Explain special depreciation methods. Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation Changes in Depreciation Rate Accounted for in the period of change and future periods (Change in Estimate) Not handled retrospective...
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This note was uploaded on 04/02/2013 for the course ACCT 415 at USC.

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