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Assignment_6_-_Lecture_notes

Good for manufacturing equipment formula cost

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Good for manufacturing equipment. Formula = (Cost – residual value)/estimated total units = depreciation per unit. Depreciation per unit * units produced in one year = depreciation expense for year Example1 (full year): Cost of Fixed Asset: $5,000 Residual value: $500 Estimated number of units: 9,000 Units in first year: 800 Units in second year: 1200 Table Year Cost Depreciation Expense Accumulated Depreciation Book Value 1 5,000 400 400 4,600 2 5,000 600 1,000 4,000 Example 2 (partial year): Partial year does not matter. Based on units made, not time used.
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Adjusting Entry to Record Depreciation: Dr Depreciation Expense $x,xxx Cr Accumulated Depreciation $x,xxx Intangible Assets Cannot be touched Some are amortized, not depreciated 1. Patents – Amortized over 20 years 2. Copyrights – Amortized over 70 years after the death 3. Trademarks – Not amortized, does not lose value 4. Goodwill – not amortized a. Only record when a business is sold b. Goodwill = Price paid – fair value of the business c. Pay more than value for: location, customer base, employees d. If goodwill becomes impaired (not worth the amount paid) it must be credited off of the books. Intangible - amortization Fixed assets – depreciation Natural resources - depletion
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Good for manufacturing equipment Formula Cost residual...

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