Depreciation

Chia sẻ: Ziwan Ziwan | Ngày: | Loại File: PDF | Số trang:5

0
259
lượt xem
9
download

Depreciation

Mô tả tài liệu
  Download Vui lòng tải xuống để xem tài liệu đầy đủ

Depreciation is the allocation of the acquisition cost of a fixed asset to different business periods (based on the accrual basis, the going-concern concept, and the matching concept)

Chủ đề:
Lưu

Nội dung Text: Depreciation

  1. Depreciation iDepreciation is the allocation of the acquisition cost of a fixed asset to different business periods (based on the accrual basis, the going-concern concept, and the matching concept) iDepreciation is recognized as an expense in the period, reducing taxable income and income tax iDepreciation is not a cash flow 02/10/2003 TanBinh 1 Depreciation Depreciation is a general term, but sometimes different terms are used for different types of fixed assets: - “Depreciation” is used for tangible fixed assets - “Amortization” is used for intangible fixed assets - “Depletion” is used for fixed assets such as natural resources 02/10/2003 TanBinh 2
  2. Depreciation methods iStraight line iDeclining balance iDouble declining balance iSum of the years’ digits iUnit depreciation 02/10/2003 TanBinh 3 Straight line depreciation (SLD) Firm A Depreciation rate 20% Year 1 2 3 4 5 Beginning net value 5000 4000 3000 2000 1000 Depreciation during period 1000 1000 1000 1000 1000 Accumulated depreciation 1000 2000 3000 4000 5000 Ending net value 4000 3000 2000 1000 0 02/10/2003 TanBinh 4
  3. Declining balance (DB) at a rate of 50% Firm B Depreciation rate 50% Year 1 2 3 4 5 Beginning net value 5000 2500 1250 625 312.5 Depreciation during period 2500 1250 625 312.5 312.5 Accumulated depreciation 2500 3750 4375 4687.5 5000 Ending net value 2500 1250 625 312.5 0 02/10/2003 TanBinh 5 Double declining balance (DDB) Firm C DDB rate 40% Year 1 2 3 4 5 Beginning net value 5000 3000 1800 1080 540 Depreciation during period 2000 1200 720 540 540 Accumulated depreciation 2000 3200 3920 4460 5000 Ending net value 3000 1800 1080 540 0 02/10/2003 TanBinh 6
  4. Sum of the years’ digits (SYD) Firm D Sum of the years' digits 15 Year 1 2 3 4 5 Beginning net value 5000 3333 2000 1000 333 Depreciation during period 1667 1333 1000 667 333 Accumulated depreciation 1667 3000 4000 4667 5000 Ending net value 3333 2000 1000 333 0 02/10/2003 TanBinh 7 Unit depreciation Firm E Year 1 2 3 4 5 Beginning net value 5000 4250 3250 1750 750 Depreciation rate 15% 20% 30% 20% 15% Annual depreciation 750 1000 1500 1000 750 Accumulated depreciation 750 1750 3250 4250 5000 Ending net value 4250 3250 1750 750 0 02/10/2003 TanBinh 8
  5. Comparison (example: at the end of year 2) FIRM A B C D E Depreciation method SLD DB DDB SYD Unit Acquisition cost of fixed asset 5000 5000 5000 5000 5000 End-of-year-2 acc. depreciation 2000 3750 3200 3000 1750 End-of-year-2 remaining value 3000 1250 1800 2000 3250 Depreciation expense for year 2 1000 1250 1200 1333 1000 02/10/2003 TanBinh 9
Đồng bộ tài khoản