Business Administration 2257 Chapter Notes -Westjet, Web Development

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Chapter 9 (part ii) reporting and interpreting property, Impairment: occurs when events or change circumstances cause the book value of long- term assets to exceed their fair value, such as a significant decrease in its market price. If net book value > fair value, then the asset is impaired. Fair value: the amount at which an asset can be bought or sold between two willing parties. Can be determined based on quoted market prices. Impairment loss = net book value fair value. The disposal of an amortizable asset usually requires two entries: an adjusting entry to update the amortization expense and accumulated amortization accounts, an entry to record the disposal. Net book value = original cost accumulated amortization. Natural resources often called wasting assets, because they are depleted. Depletion: the systematic and rational allocation of the cost of a natural resource over the period of exploitation. Intangible assets with indefinite lives are not amortized.

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