BMGT 310 Chapter Notes - Chapter 11: Matching Principle, Eof, Ddb Worldwide

• School: University of Maryland
• Department: Business and Management
• Course: BMGT 310
• Professor: Handwerger

Document Summary

Property, plant, and equipment and intangible assets: utilization and impairment. Pp&e are acquired to be used as part of the revenue-generating operations. The costs of acquiring the assets should be allocated to expense during the reporting periods benefited by their use. Depreciation, depletion, and amortization are processes that attempt to satisfy the matching principle. Depreciation, depletion, and amortization for an asset used to manufacture a product are included in the cost of inventory. The process of cost allocation requires that three factors be established at the time the asset is put into use. We will refer to the following hypothetical company in covering the depreciation methods. Time based depreciation methods: straight line method-assumes the depreciation expense is the same each year. Depreciation expense = acquisition cost-salvage value (depreciable days) Sum of years=15, divide the years in recverse by the sum of the years. Note: do not depreciate an asset past its salvage value!