ACCTG 101 Lecture Notes - Lecture 10: Income Statement, Cash Flow, Asset
Document Summary
When ppe, or other depreciable assets, is acquired, it is recorded, or capitalized on the balance sheet. Once capitalized, the cost of plant and equipment is recognized as expense over the period the assets produce revenue called depreciation. To determine depreciation expenses a company will consider. Period over which the asset is expected to generate measurable benefits. Amount expected for the asset when disposed of at the end of its useful life. Estimate of who the asset is used up over its useful life. Depreciation expense is recognized evenly over the estimated useful life of the asset. Depreciation base (cost - salvage value) x depreciation rate (1/estimated useful life) If purchased midyear, then calculate months remaining in the year x annual depreciation expense. Increase accumulated depreciation (contra- asset, so minus) for the year in non-cash assets; decrease retained earnings; expenses in is. Net book value: remaining value for the asset, carrying value.
