ADMS 3585 Chapter Notes - Chapter 11: Fixed Asset, Book Value, Financial Statement

• School: York University
• Department: Administrative Studies
• Course: ADMS 3585
• Professor: Professor Alcalde

Document Summary

Adms 3585 ch 11 importance of depreciation, impairment, disposition from business perspective. Judgment/estimates required to answer these questions ; depreciation is an estimate: asset components, must develop componentization policy guide decision which fixed asset components recognize separately, principles that guide componentization. In practice, usually use residual value over salvage value: ex p. 630 cost 10,000$ ; 8 years; rv 3,600# Ifrs 6,400/8 = 800$ ; aspe uses greater value. Legal life limit useful life ; ex. benefits of leasehold improvements end when lease term over: must consider whether to evaluate using: economic factors / physical factors. Illustration 11-4 p. 633 data used in all depreciation method examples: straight line method. Illustration 11-5: objection, method relies on 2 assumptions, asset actually does deliver equal economic benefits each year, maintenance expense is about same each period, creates distortion in rate of return analysis.