Management and Organizational Studies 3360A/B Chapter Notes - Chapter 11: Impaired Asset, Book Value, Market Capitalization

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3360A/B
• Professor: Christina Maco

Document Summary

Intangibles = amortization x: natural resources = depreciation x. Residual value- what you get for the asset at the end of its useful life. Salvage value- what you get for the asset at the end of its physical life. The asset actually does deliver equal economic benefits each year. Maintenance expense is about the same each period (assuming constant revenue flows: diminishing balance method (decreasing charge/ accelerated amortization, take percentage applied to net book value (cost a/d + impairment losses) In the year of purchase, depreciation is calculated from the date of purchase to the fiscal year end. Some companies set a policy to simplify the process, such as. Take no depreciation in year of purchase and full year depreciation in year of disposal (or vice versa) Charge half year depreciation in year of purchase and disposal. Allowed as long as method is applied consistent and effect on financial statements is not material.