Depreciation (Flashcards)

This is the result of subtracting a plant asset’s accumulated depreciation from the asset’s cost.

This allocation method results in the same amount in each full year of a plant asset’s useful life.

This allocation method results in a greater amount in the early years of a plant asset’s life and a smaller amount in the final years.

When this form of accelerated depreciation is used for a plant asset with a useful life of 5 years, the depreciation in the second year of the asset’s life will be 4/15 of the asset’s depreciable cost.

This accelerated depreciation method multiplies a constant percentage times the beginning-of-the-year book value of the asset being depreciated.

When this accelerated depreciation method is used for an asset having a cost of $100,000 and a useful life of 10 years, the depreciation in the second year of the asset’s life will be $16,000.

This estimated amount of a plant asset’s value at the end of its useful life is used in some of the depreciation methods. This is sometimes referred to as the asset’s residual value.

This estimate of a plant asset’s life is often expressed in years and it is likely to be shorter than the asset’s physical life.

This estimate of how long a plant asset could last is likely longer than the asset’s useful life.

This is the accounting period’s allocated amount of an asset’s cost that is reported on a company’s income statement.

This term indicates that depreciation is the spreading of an asset’s cost to the accounting periods that benefit from its use.

This basic accounting principle requires a plant asset’s cost to be allocated to depreciation expense (or to manufacturing overhead) over the asset’s useful life.

This depreciation is found in a company’s general ledger accounts and financial statements and it is likely different from a U.S. company’s tax depreciation.

This depreciation is based on IRS regulations and is likely different from the amount reported on a company’s financial income statement.

This journal is used to record the depreciation before it is posted to the general ledger accounts.

The entry to record depreciation is an example of this type of journal entry.

This technique results in reporting one-half year of depreciation expense in the year that an asset is placed into service and one-half year of depreciation in the final year of the asset’s life.

This term includes a sale or a retirement of a plant asset (such as a building, equipment, vehicle, etc.)

The type of asset account is expected to have a credit balance. An example is Accumulated Depreciation.

This asset is part of the asset category property, plant and equipment but it is not depreciated.

This name is often used when referring to the tangible, noncurrent assets that are used in a business and (except for land) will be depreciated over their useful life.

Under this depreciation method a plant asset’s cost is allocated based on the asset’s activity instead of its years of use.

This occurs when a plant asset is sold for less than its book value.

This occurs when a plant asset is sold for more than its book value.

Depreciation is this type of expense because the cash spent for a plant asset usually occurs in an earlier accounting period.

This describes a plant asset that has accumulated depreciation equal to the asset’s cost minus its estimated salvage value. Depreciation also stops when this occurs.

This is a plant asset’s cost minus its expected salvage value.

These costs are included in the cost of a plant asset. An example is the installation cost of a new plant asset. (On the other hand, a cost that is the result of negligent handling during installation is not included in the cost of a plant asset.)

The annual depreciation of manufacturing equipment is part of this indirect production cost.

This interest on the debt that was needed to finance a self-constructed building will be part of the building’s cost and part of the subsequent depreciation.

This is the amount spent to acquire or improve a noncurrent tangible asset that is used in a business.

This property, plant and equipment account is used to accumulate the costs of a project that has not yet been placed into service. (There is no depreciation until the project is put into service.)

This describes when an asset is first used for its intended purpose and when depreciation begins.