BU387 Lecture Notes - Lecture 5: Liquidating Distribution, Book Value, Retained Earnings
Document Summary
Regardless of whether the cost model or the revaluation model is chosen to measure assets after acquisition, the three major systematic methods are: straight line method, decreasing charge method, activity method. Declining balance method = straight line x 2 typically for double declining balance. Or = book value x declining balance rate. Depreciation expense per hour = cost residual value. If the depreciation expense per hour is , and in the first year, 4000 hours are used: Depreciation expense = x 4,000 hours = ,000. Depletion cost per unit = total cost residual value = ,000,000 = /ounce. Liquidating dividends company may decide to distribute the shareholders a portion of all of their capital investment, which is a dividend greater than the amount of accumulated net income. These dividends are usually equal to the accumulated amount of net income (after depletion) plus the amount of depletion that has been charged.
