Financial Act Chpt 9 Notes

Accumulated depreciation for each asset is recorded

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Unformatted text preview: ystematic, rational method. Accumulated depreciation for each asset is recorded in the accumulated depreciation account on the balance sheet (a contra-asset account). Assets are listed at their Net Book Value. (Building (at cost) - accumulated depreciation = Net book value) Important Information to calculate depreciation: • Acquistion cost: Discussed above! • Estimated Useful Life: Represents the amount of time or amount of usage a company expects an asset to be used. • Estimated Salvage (Residual) Value: An estimate of what the asset will be worth when it will no longer be used in operations (at the end of its useful life) Three acceptable depreciation methods under GAAP: • Straight Line: Most common; assumes an asset will be used over a period of years and then retired. Calculate depreciation and charge same amount each month. Calculate by: (Cost-Salvage Value)/# of years expect to use the asset • Units of Production: Relates depreciation to how much an asset will be used rather than # of years. Gives you a depreciation rate per unit of production, and then charge by taking that rate x amount us...
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This note was uploaded on 01/23/2014 for the course ACG 2021 taught by Professor Linkovich during the Spring '08 term at University of South Florida.

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