AC 305 Lecture Notes - Lecture 11: Impaired Asset, Book Value, Income Statement
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Assume the following related to a piece of machinery used by the salisbury co. Using the activity based method, calculate: (a) depreciation expense assuming the machine was used for 6,400 hours in the first year of its useful life, and (b) the book value at the end of the first year. The cost of an asset charged to expense. The estimated life that an asset is useful or can remain in service for a company. The estimated value of an asset at the end of its service life. An asset is depreciated until the salvage value is reached. Asset cost less salvage value: deprecation base = cost-salvage value. A contra asset account that reduces the value of an asset on the balance sheet. The net value of an asset on the books/balance sheet. Book value = (cost = accumulated depreciation: activity method (units of production) Depreciation is assumed to be a function of productivity rather than the passage of time.