ADM 1340 Study Guide - Income Tax, Book Value, Operating Lease

• School: University of Ottawa
• Department: Administration
• Course: ADM 1340
• Professor: All

Document Summary

Property, plant, and equipment are often subdivided into four classes: Here are some advantages of leasing an asset rather than purchasing it: 1- reduced risk of the negative impact of obsolescence. Operating lease: a short-term lease where it is only recognized as rent expense". Capital lease: a long-term lease where it is treated like a purchase that is financed by a loan. **depreciation is a process of cost allocation, not a process of determining an asset"s fair value (book value)** Cost model: records property, plant, and equipment at cost when acquired. 1- straight line: an equal distribution of the depreciable value over its useful life. 2- diminishing value: a percentage of depreciation allocated to the carrying amount each year. 3- units-of-production: the percentage of usage over the total expected usage. 500,000 hours of total usage on a generator of which 50,000 hours were used in the. Adm 1340-financial accounting: chapter 9-reporting and analyzing long-lived assets.