MGMT 30A Lecture Notes - Lecture 8: Intangible Asset, Fixed Asset

• School: UC-Irvine
• Department: Management
• Course: MGMT 30A
• Professor: Machiavelli Chao

Document Summary

Depreciation applies to all fixed assets except land. Debit depreciation expense, credit accumulated depreciation (contra asset) Net fixed asset: fixed asset minus accumulated depreciation. Accumulated depreciation can never exceed cost of fixed asset. Depreciable cost: original cost purchased asset for-estimated salvage value. Depreciable cost / estimated total units of activity. Actual annual units of activity x per unit rate. Straight line: allocates same amount of depreciation annually. If purchase or sell during year, pro-rate. Net book value= purchase price - accumulated depreciation. Doubled straight line rate x net book value. Check if accumulated depreciation exceeds depreciable cost. Update depreciation expense and accumulated depreciation up til sale date. If sales price> net book value, then gain on sale. Debit cash, debit accumulated depreciation (wipe out), credit fixed assets for original purchase price, credit gain on sale (plug) If sales price < net book value, then loss on sale.