Scribd Logo
Upload

Welcome to Scribd!

  • 55 views

    Intermediate Accounting 1B Notes

    Uploaded by

    parkjenaa09
    The document discusses different methods of depreciating property, plant, and equipment including straight-line, sum of years digits, double declining balance, and units of production methods. It defines key terms like depreciable amount, residual value, useful life, and depreciation rate. The document also notes that PAS 16 requires an annual review of depreciation methods and estimates of useful life and residual value.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Intermediate Accounting 1B Notes

    Uploaded by

    parkjenaa09
    55 views2 pages
    The document discusses different methods of depreciating property, plant, and equipment including straight-line, sum of years digits, double declining balance, and units of production methods. It defines key terms like depreciable amount, residual value, useful life, and depreciation rate. The document also notes that PAS 16 requires an annual review of depreciation methods and estimates of useful life and residual value.

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses different methods of depreciating property, plant, and equipment including straight-line, sum of years digits, double declining balance, and units of production methods. It defines key terms like depreciable amount, residual value, useful life, and depreciation rate. The document also notes that PAS 16 requires an annual review of depreciation methods and estimates of useful life and residual value.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    55 views2 pages

    Intermediate Accounting 1B Notes

    Uploaded by

    parkjenaa09
    The document discusses different methods of depreciating property, plant, and equipment including straight-line, sum of years digits, double declining balance, and units of production methods. It defines key terms like depreciable amount, residual value, useful life, and depreciation rate. The document also notes that PAS 16 requires an annual review of depreciation methods and estimates of useful life and residual value.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Intermediate Accounting 1B - Notes

    Property, plant and equipment (part 2) Note


    - Under cost model, PPE is carried at cost less - Carrying amount is equal to residual value or
    accumulated dep. and accumulated impairment zero when asset is fully depreciated.
    losses.
    Depreciation Acceleration Depreciation Methods
    - Systematic allocation of depreciable amount - Depreciation decreases over time, depreciation
    over useful life. is higher earlier years and lower in the later
    Depreciable Amount years.
    - Historical or initial amount less residual value. 2. Sum of the years digits
    Residual Value - Depreciation is computed by applying series of
    - Estimated amount that entity would obtain fractions to the depreciable amount of asset.
    from disposal less cost of disposal. SYD denominator
    Useful life life+1
    ¿ life×
    - Period of asset that it is available for use. 2
    - Number of production or similar units expected Or, if useful life is 5 years, =5+4+3+2+1
    to be obtained from the asset. Depreciation
    - Expected usage, expected physical wear,
    remaining life
    obsolescence, and legal limitation should be ¿ ( historical−residual ) ×
    taken into account. SYD denominator
    3. Double declining balance method
    Kinds of depreciation
    - Depreciation is computed by applying foxed
    1. Physical- from deterioration and wear down.
    rate on the asset’s carrying amount, rather than
    2. Functional or economic- obsolescence or
    depreciable amount.
    inadequacy to perform.
    Double declining rate
    2
    Note ¿
    life
    - Each significant part of PPE is depreciated
    Depreciation
    separately.
    - Depreciation starts when it is available for use. ¿ carrying amount × double declining rate
    - Depreciation stops when asset is derecognized, Note
    classified as held for sale, and fully depreciated. - The minimum carrying amount of an asset with
    - PAS 16 does not require any depreciation a residual value is the residual value. Any
    method but prohibits depreciation based on amount that a depreciation might go below
    revenue. that, then the asset is considered fully
    - PAS 16 requires annual review of the depreciated.
    depreciation method and the estimates of useful - When double declining balance method results
    life and residual value, any changes is into a higher depreciation, carrying amount is
    accounted for prospectively. depreciated over the remaining useful life using
    Depreciation Methods straight line method. (Logic: total depreciation
    - Straight-line, diminishing, and units of should equal total cost, or the remaining
    production. balance should be zero or the residual value.)
    Depreciation Method based on time Depreciation method based on the actual physical
    1. Straight-line Method use
    - Depreciation is recognized evenly over useful 4. Units of production
    life of asset. - Relates depreciation to the estimated
    Annual Depreciation production capability of an asset and is
    historical−residual value expressed in a rate per hour of input or per unit
    ¿ of output.
    useful life
    - When the asset is not used, there is no
    depreciation.
    Intermediate Accounting 1B - Notes
    Depreciation rate
    depreciable amount
    ¿
    estimated hours∨est . units
    Depreciation
    ¿ actual hours∨units ×depreciation rate
    Note
    - If estimated hours is used in getting dep. rate,
    then used actual hours in getting depreciation.
    If estimated units is used in getting dep. rate,
    then use estimated units in getting
    depreciation.

    You might also like