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20 terms

Chapter 10

STUDY
PLAY
Recording depreciation
Depreciation Expense
Accumulated Depreciation
3 methods of depreciation
1. Straight-line
2. Units of production
3. Declining Balance
Straight-line depreciation formula
cost of asset - salvage value / useful life ( in years )
Book value formula
cost - accumulated depreciation
Units of Production are mostly used for?
equipment and machinery
Units of Production formula
cost of asset - salvage value / useful life ( in units of production)
first step to selling a fixed asset
Get the old asset off the books.
Accumulated Depreciation
Asset
second step to selling a fixed asset
Debit Cash for any cash received
Cash
Accumulated Depreciation
Asset
Third step to selling a fixed asset
Determine if there is a gain or a loss on the sale. (BV vs SP)
Cash
Accumulated Depreciation
Asset
Gain on Sale of Fixed Asset
*Losses have credit balances
Gain on Sale of Fixed Asset has a normal...
Credit balance
Loss on Sale of Fixed Asset has a normal...
Debit balance
Natural resources are ______, not depreciated.
Depleted
Natural Resources- depletion
Depletion expense
Accumulated Depletion
* Use units of production depreciation method!
Intangible Assets are _________, and not depleted.
Amortized
Intangible Assets - Amortization
Amortization Expense
Accumulated Amortization
The Relevant factors in computing depreciation include:
1. Cost
2. Salvage value
3. Useful life
4. Depreciation method
Depreciation:
is the process of allocating to expense the cost of a plant asset
The total cost of an asset less its accumulated depreciation is called:
Book value
A method that allocates an equal portion of the total depreciable cost for a plant asset to each unit produced is called:
Units - of - production depreciation
Amortization:
is the systematic allocation of the cost of an intangible asset to expense over its estimated useful life.