BU127 Chapter 9: Chapter 9 BU127
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BU127 Full Course Notes
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Resources owned by a business and used in its operations to produce benefits over several years. These costs are capitalized when they are recorded as assets instead of expenses. Costs are added to purchase price of the asset. Using a systemic method to allocate the acquisition cost of buildings and equipment over their useful lives. Depreciation is a process of cost allocation and does not represent the current market value. Periodic depreciation expenses are accumulated in xa account accumulated. Carrying value = acquisition cost - accumulated depreciation (and write-downs) Expected amount of time asset will be used by company. Estimated residual value at end of useful life. Expected amount to be recovered at end of useful life: methods of calculating depreciation. Allocates cost of asset over useful life in equal periodic amounts. Depreciation expense = depreciable cost * straight-line rate. Allocates cost of asset over useful life based on relation of its periodic output to its total estimated output.
