财务管理基础 外文版7.pptVIP

Chapter 10 Depreciation Methods Depreciable Asset Types DEPRECIATION 弗兰克唐英年韦德博士 Dr. FRANK HENRY WADE ，CPA，CIA，CMA，CISA 莆田学院，中国 Putian University, China 00865942694714 ， 00865942694704 Cell 008615160200413 ASSET TYPES---Never Land Land Improvements……. Depreciation Natural Resources……… Depletion Intangibles(Patents,Copywrighte, Goodwill)…………………….. Amortization THREE ASPECTS 1. COST 2. Depreciable Life 3. Residual Value (Depreciate to this Value) Definition of Capital Asset Not repairs and routine maintaince costs such as painting, replacing fixtures, windows Capital improvement extends life of asset such as repaving street or remodeling building New building: All costs to bring the asset into service earning revenue for firm. Example of capitalized costs…. Machinery and Equipment TYPES OF DEPRECIATION Straightline DDB Units of production: This is determined by “Quantity Surveyor” who presents Quarterly Appraisal Reports to Independent Part such as Bank. In South Africa construction, I based my depreciation of equipment on “Quantity Surveyor “ Reports which was part of our contract with World Bank who reported to Bank. Straight-Line Method Example Units-of-Prod Methd for Depletion Depreciation EX Depletion-ARAMCO Dr Oil Reserves Saudi Arabia Ras Al Mishab Field 800 Billion Cr CASH 800B DR Depletion Expense 300M CR Accum Depletion Allow 300m Double-Declining-Balance Method Ex(Down to Residual) (depreciate down to salvage ) Straight-line rate is 100% ÷ 4 = 25% Double-declining-balance = 2 times the straight-line rate = 50% What is the book value of the van at the end of the first year? $22,000 × 50% = $11,000 $22,000 – $11,000 = $11,000 2nd Year $11k x 50% = $5,500 3rd Year $5.5k x 50% = $2,750 4th Year $2.75 x 50%= 750 (1.375 was charge. But depreciation stops at $2,000 residual value.) Depreciation Methods Comparison MACRS (Modified Cost Recovery System) In USA,