BUS 251 Chapter Notes - Chapter 8: Impaired Asset, Asset Turnover, Capital Cost
6 May 2016
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Age, future outflows of cash to replace, depreciation cost, negative changes in the expected use, rent, creditor security, cash inflow and outflow of investing activities. Cost model: carrying amount = cost accumulated depreciation accumulated impairment loss. Revaluation model: fair value => relevant to lender only. Basket purchase: relative fair value => allocate price of building and land (building depreciate while land doesn"t), some assets depreciate differently. Increase net income: allocate more price to land. Decrease net income: allocate more price to building. => future economic benefit (extend useful life, reduce operating cost, improve quality and quantity output) => capitalized. Depreciation method: early/constant/fluctuate usage of ppe => to reflect effectively expected future benefit to be used up. Straight line method units of production diminishing balance method. R ec or d depreciation expense if assets were purchased before 15th or exposed after. Gain = too much expense, too low residual value or too short life.
