# "Depreciation" Essays and Research Papers

### Depreciation

Depreciation Methods Depreciation is the accounting process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset. Factors Involved in the Depreciation Process 1. What depreciable base is to be used for the asset? 2. What is the asset’s useful life? 3. What method of cost apportionment is best for the asset? Depreciable Base for the Asset The base established for depreciation is a function...

Premium Asset, Book value, Consumption of fixed capital 929  Words | 5  Pages

### Total Depreciation

straight-line depreciation method for all of its plant and equipment. Partial-year depreciation is calculated based on the number of months the asset is in service. Prepare the journal entry to record the sale. Assuming the company’s year end is March 31. Depreciation for 2007-08: ((80000-5000)/5) X 9/12 = 11250 Depreciation for 2008-09: ((80000-5000)/5) = 15000 Depreciation for 2009-10: ((80000-5000)/5) = 15000 Depreciation for 2010-11: ((80000-5000)/5) = 15000 Total Depreciation 46250 Carrying...

Premium 1916, 1920, 1971 661  Words | 3  Pages

### INTRODUCTION Of Depreciation

﻿INTRODUCTION Depreciation expense is an accounting and financial reporting practice, used primarily by businesses that pay tax on income. On the income statement, this expense appears as a charge against income, that is, it is subtracted from sales revenues to produce a lower reported income. Over the years and at different periods in time, depreciation has meant different things to different people. According to International Accounting Standard (IAS) depreciation is the allocation of the depreciable...

Premium Asset, Balance sheet, Book value 1118  Words | 5  Pages

### Depreciation and Value

Company A recognizes depreciation to the nearest whole month. Calculate the depreciation expenses for 2011, 2012, 2013 using straight line depreciation method. Solution: Cost = \$140,000 Salvage value = \$20,000 Useful life = 5 year Annual depreciation = Cost - salvage valueuseful life = 140,000-20,000 5 = 120,0005 = \$24000 Annual rate of depreciation = annual depreciationtotal depreciation×100% ...

Premium Book value, Depreciation, Discounts and allowances 1733  Words | 7  Pages

### Depreciation and Corn

corn. Financial accounting policies and procedures helped to make the statements of each farm’s operations relevant and reliable. The straight-line depreciation method depreciated the oxen, farm implements, and building over their useful lives. For example, the cost of purchasing the oxen divided by their expected life yielded the yearly depreciation amount applied for the oxen. Due to the death of Sihathor’s worker, he granted the worker’s widow an annuity of one sack of corn per lunar cycle for...

Premium Asset, Cash flow statement, Depreciation 1946  Words | 5  Pages

### Definition of depreciation, facts and causes.

The word 'Depreciation' has been derived from the Latin word 'Depretium' which means 'decline in price' or 'value'. Depreciation relates to fixed assets which loose value on account of usage. Therefore 'Depreciation' means decline in value of fixed assets on account of usage. Definitions: Depreciation may be defined as the permanent and continuing diminution in the quality, quantity or the value of an asset.William Pickles Depreciation in the shrinkage in the value of an asset at a given date...

Premium Asset, Balance sheet, Depreciation 631  Words | 4  Pages

### Depreciation at Delta & Singapore Airlines

Accounting Depreciation at Delta Airlines & Singapore Airlines (Solution to Case #2) 24th November, 2009 1. Calculate the annual depreciation expense that Delta and Singapore would record for each \$100 gross value of aircraft. a. Delta: i. Prior to July 1, 1986 the Delta airline assets were depreciated using Straight Line Method at 10% for 10 years for a salvage value of 10%. Depreciation Expense = (Cost of Asset – Salvage Value) / number of year Depreciation Expense...

Premium Airline, Avianca, Boeing 747-400 1382  Words | 6  Pages

### Depreciation at Delta Airlines

Depreciation at Delta Airline and Singapore Airlines (A) Objective Summary: To explore the effects of depreciation changes by Delta Airlines and Singapore Airlines (A) made in 1989 and 1993. 1. Calculate the annual depreciation expense that Delta and Singapore would record for each \$100 gross value of aircraft. Depreciation Expense = (Asset Value – Salvage Value) / Depreciable Life a. Delta Airlines |   | Prior to 7/1/1986 | 7/1/1986 -3/31/1993 | 4/1/1993 Onward | ...

Premium Airline, Asset, Delta Air Lines 817  Words | 4  Pages

### Straight-line Depreciation

allocation of the asset is shown through the method of depreciation a company uses. The method a company chooses to incorporate should be one that most effectively matches expenses with the revenues produced. The method that most select is that of straight-line depreciation, which "spreads the depreciable value evenly over the useful life of an asset." (Horngren, Sundem, Elliott, & Philbrick 2006, p.342) Depreciation schedules reflect how much depreciation will be allocated for each year of the assets...

Premium Asset, Book value, Cash flow statement 610  Words | 3  Pages

### How the Companies Manipulate the Depreciation

with purchase of new assets comes the frequently heard term i.e. depreciation! All of us must have heard about depreciation and know that it is deducted before arriving at Net Profit. However, not many of us are aware of its nitty-gritty’s and the part that it plays in determining the profits of a company. In fact many of us completely ignore analyzing this important parameter. However, with considerably flexibility over how depreciation is calculated, it is one of the easiest figures to manipulate...

Premium Asset, Balance sheet, Depreciation 1335  Words | 4  Pages

### Depreciation at Delta and Singapore Airlines

Depreciation at Delta Air Lines and Singapore Airlines Acct 531 – Intermediate Finance Acct 1 SECTION 1 – 13WQ Instructor: John V. Merle, MBA February 27, 2013 Emma Waage Roarke Stone Tim Gould Introduction Depreciation expense is the way that the use of an asset is matched with the revenue that is generated from the asset on the income statement during the time period being reported. Each asset used in a business has a useful life as disclosed by the company’s depreciation...

Premium Airline, Delta Air Lines, Depreciation 1207  Words | 5  Pages

### Depreciation on Fixed Assets

Depreciation of Fixed Assets Depreciation A business may acquire fixed assets such as land, buildings, machinery, office equipment, delivery equipment and natural resources (e.g. a piece if mining land)to help in the process of its operations to earn revenue in order to make a profit.  Such assets, by their very nature, provide benefits to the business for more than one financial year or period.  In fact, when a business buys a fixed asset at a certain cost (say \$10,000), it is actually buying...

Premium Asset, Balance sheet, Book value 1638  Words | 5  Pages

### Discuss the Importance of Depreciation.

Discuss the importance of depreciation expenses. Depreciation as a concept and in practice plays a very important role in a company's cash flow hence in funding. The reason's are basically two, firstly because depreciation is a way of self finance for an organization and secondly because is a way of decreasing taxes that the government claims as the company doesn't have to pay taxes on depreciation which consequently enlarges the cash flow of the company. As a term depreciation in accounting is the...

Premium Asset, Balance sheet, Capital asset 820  Words | 4  Pages

### Depreciation: Airplanes & Garbage Trucks

Depreciation: Airplanes and Garbage Trucks Part I: Airplanes Assume that on January 1, 2005, each of the three airlines purchases a new Boeing 757 for \$75 million. Each airline estimates that the residual value will be 5% of cost. Each airline uses the average depreciation period that is consistent with its policies as stated in the Appendix, found on page 3. On January 1, 2009, each firm sells the plane. First, assume that Northwest sells its plane for \$55 million, Delta sells its plane...

Premium Arthur Andersen, Asset, Depreciation 1515  Words | 4  Pages

### Depreciation and Sale of Asset

Depreciation is the decline in the future economic benefits of a depreciable non-current asset through wear and tear and obsolescence. It is an allocation process. It can be calculated by two main methods, each reflecting in a distinct prospect in the way the asset is used. Depreciation is to be treated as an estimated expense that does not set aside cash for the replacement of a non-current asset. In determining the cost of acquisition of the lathes, any capital expenditure made must be added...

Premium Asset, Capital expenditure, Cost 975  Words | 3  Pages

### Hertz: Depreciation and Present Value

are competing to sell a fleet of 25 cars to Hertz. Hertz fully depreciates all of its rental cars over five years using the straight-line method. The firm expects the fleet of 25 cars to generate \$100,000 per year in earnings before taxes and depreciation for five years. Hertz is an all-equity firm in the 34-percent tax bracket. The required return on the firm’s unlevered equity is 10 percent, and the new fleet will not add to the risk of the firm. a. What is the maximum price that Hertz...

Premium Basic financial concepts, Depreciation, Equals sign 641  Words | 3  Pages

### Accounting: Depreciation and Cash Flow

truck and an overhead pulley system, in this year’s capital budget. The projects are independent. The cash outlay for the truck is \$17,100 and that for the pulley system is \$22,430. The firm’s cost of capital is 14%. After-tax cash flows, including depreciation, are as follows: Year Truck Pulley 1 \$5,100   \$7,500   2 \$5,100 \$7,500 3 \$5,100 \$7,500 4 \$5,100 \$7,500 5 \$5,100 \$7,500 Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept-reject decision for each. ...

Premium Cash flow, Corporate finance, Depreciation 1376  Words | 6  Pages

### Depreciation and Corporate Finance Exercise

(excluding VAT). The total transportation and testing cost is 5 million VND. Their estimated useful life is 5 years. Required: 1. You are asked to create a depreciation table for these equipments, using these following methods: a. Straight line method b. Double declining balance method c. Sum of years’ digits method 2. Compare their depreciation expenses and rates, then comment on their capital recovery rates. (Assume that this enterprise pay VAT by the tax deduction method) EXERCISE 2 A forestry...

Premium Asset, Balance sheet, Depreciation 1141  Words | 3  Pages

### Annual Depreciation Rate

manufacturing space, and RIC currently has an option to purchase an existing building, at a cost of \$10 million, which would meet this need. The building would be bought and paid for on December 31, 2008, and for depreciation purposes, it would fall into the MACRS 39- year class. The annual depreciation rate for the five years of economic life of the project would be: Year 1 1.3% Year 2 2.6% Year 3 2.6% Year 4 2.6% Year 5 2.6% d. The necessary equipment would be purchased and installed in late 2008...

Premium Cost, Costs, Depreciation 703  Words | 3  Pages

### Depreciation and Income Statement

Premium Asset, Balance sheet, Cash flow 1013  Words | 4  Pages

### Depreciation: Airplanes and Garbage Trucks

ACCTNG 3402 – Financial Accounting and Reporting II Assignment due February 13, 2013 Spring, 2013 Depreciation: Airplanes and Garbage Trucks Your answers to the questions below should be clear, well-written, free of grammar and spelling errors, double-spaced with margins of at least one inch on all sides, and word-processed. In preparing this assignment, you may discuss the issues with each other or with anyone else, but your written answers must be your own work. If you need to quote someone...

Premium American Airlines, Asset, Boeing 757 1114  Words | 3  Pages

### Accounting: Depreciation and Marks

business was due, but has not been recorded or received. No depreciation has been recognised for the year ending 30 June 2014. The draft Balance Sheet shows the following: Buildings (at cost) Less Accumulated Depreciation Office Furniture & Equipment (at cost) Less Accumulated Depreciation \$80,000 16,000 \$64,000 10,500 6,500 4,000 These amounts do not include any of the transactions listed above. Annual depreciation is to be calculated as follows:  Buildings: 2% of cost ...

Premium Asset, Balance sheet, Bank 1278  Words | 5  Pages

### Depreciation and Checking Account Balance

288 Sales discounts 950 Depreciation Expense 600 Cost of merchandise sold 7,600 Gross sales 20,900 Advertising expense 1,650 Salary expense 2,900 Heat expense 900 A. Net Sales B. Gross Profit C. Total operating expenses D. Net income The 14. A truck costing \$25,000 with residual value of \$5,000 was purchased by Rim coprporation. truck's estimated life is 10 years. At the end of Year 2, what is the book value using declining-balance method? Assume a depreciation rate of twice the straight-line...

Premium Compound interest, Depreciation, Discount rate 1368  Words | 5  Pages

### Depreciation and Vital Spark

Spark, with and without the new engine and control system. To do the calculation, you will have to prepare a spreadsheet table showing all costs after taxes over the vessel's remaining economic life. Take special care with your assumptions about depreciation tax shields and inflation. New Economy Transport (B) There is no question that the Vital Spark needs an overhaul soon. However, Mr. Handy feels it unwise to proceed without also considering the purchase of a new vessel. Cohn and Doyle...

Premium Book value, Cost, Costs 817  Words | 3  Pages

### Depreciation

the following form to address the five methods of computing book depreciation for health care organizations: QUESTION ANSWER – Do not forget to list references at the bottom of the paper. Write a minimum of 30 words for each area listed. Straight Line Depreciation: No salvage Salvage The simplest most commonly used depreciation method. The straight line depreciation method assigns an equal or even amount of depreciation expense over each year of the assets life. The calculation is (purchase...

Premium Asset, Book value, Depreciation 459  Words | 1  Pages

### Depreciation and Fair Value Adjustment

﻿ACCT332 Quiz 1 Last Name___________________ First Name ________________ Section#____________________ 1. Diversified Industries sells electronic products in reusable containers. Customers pay a deposit for each container. The deposit is equal to the container's cost. Customers receive a refund when the container is returned. During 2012, deposits collected on containers shipped were \$350,000. Deposits are forfeited if containers are not returned in 18 months. During 2012, \$250,000 was refunded...

Premium Accounts receivable, Asset, Deposit account 414  Words | 3  Pages

### EW_P3-30A

Dec 31 Service Revenue 117,500 Income Summary 117,500 Close Service Revenue 31 Income Summary 42,100 Salary Expense 33,000 Supplies 2,000 Depreciation Expense, furnitiure 1,100 Depreciation Expense, building 6,000 Close Expense 31 Income Summary 75,400 Marcia Sandvold, capital 75,400 Close Income Summary 31 Marcia Sandvold, capital...

Premium Accounting software, Accounts payable, Accounts receivable 256  Words | 4  Pages

### Principles of Quantitative Methods

Principles of Quantitative Methods 2011 Table of Contents Question 1 – Difference between Simple Interest and Compound Interest 3 1.0 Simple Interest 3 1.1Compound Interest 4 Question 2 – Difference between Depreciation by Straight Line Method and Depreciation by Reducing Balance Method 6 2.0 The Difference 6 Question 3 - Standard Deviation and Quartile Deviation 7 Standard Deviation 7 Quartile Deviation 8 3.0 Purpose of Calculating Standard Deviation and Quartile Deviation 8 3...

Premium Arithmetic mean, Compound interest, Depreciation 2070  Words | 6  Pages

### QUIZ 2 STUDY GUIDE

According to the depreciation rates used by the company and described in the Production Cost Report, if a company adds 50 new workstations at a cost of \$250,000 each and also spends \$5 million for an addition to its assembly plant to accommodate the new workstations, then its annual depreciation costs will rise by \$1,750,000 \$700,000 \$350,000 \$17,500,000 None of these Income Statement Data Quarter 1 (in 000s) Sales Revenues \$50,000 Operating...

Premium Asset, Balance sheet, Depreciation 546  Words | 6  Pages

### Case 7-2 Joan Holtz

borrowed to finance construction: capitalized f) Local real estate taxes: capitalized g) Cost of mistakes: expensed h) Overhead costs capitalized i) Insurance & non-covered by insurance costs: expensed 2. a) Firstly, we need to match its depreciation to revenue still being earned from the theater, small stores, and apartment buildings, until the building gets razed. This demonstrates that Archer Company’s intentions when purchasing the land and buildings, was to raze the old building and construct...

Premium Book value, Cost, Costs 1105  Words | 4  Pages

### Depriciation

1. Calculate the annual depreciation expense that Delta and Singapore would record for each \$100 gross value of aircraft. Depreciation=(original value-residue value)/estimated used year a) For Delta, what was its annual depreciation expense (per \$100 of gross aircraft value) prior to July 1, 1986; from July 1, 1986 through March 31, 1993; and from April 1, 1993 on? Annual depreciation expenses each \$100 gross value of aircraft: Before July 1, 1986: (100-100x10%)÷10=9\$ ...

Premium 1917, Airline, Delta Air Lines 728  Words | 3  Pages

### Financial Statement and Cash Flows

for the current year: Sales = RM3,000,000; Cost of Goods Sold = RM1,500,000; Depreciation Expense = RM170,000; Administrative Expenses = RM150,000; Interest Expense = RM30,000; Marketing Expenses = RM80,000; and Taxes = RM300,000. JJ’s operating income is equal to A) \$770,000. B) \$1,070,000. C) \$1,100,000. D) \$1,500,000. Explanation: Sales — Cost of Goods Sold — Depreciation Expense — Administrative Expenses — Marketing Expenses 3) JJ’s net profit...

Premium Asset, Balance sheet, Depreciation 632  Words | 4  Pages

### Finance 3.1-3.5

would be the equipment. 3.7 Income Statements: The Oakland Mills Company has disclosed the following financial information in its annual reports for the period ending March 31, 2011: sales of \$1.45 million, costs of goods sold of \$812,500, depreciation expenses of \$175,000, and interest expenses of \$89,575. Assume that the firm has a tax rate of 35 percent. What is the company’s net income? Set up an income statement to answer the question. A= \$242,401,25 3.8 Cash flows: Describe the organization...

Premium Accounts receivable, Asset, Balance sheet 911  Words | 5  Pages

### ACCT 9.3B

………………………………………………………… Sales taxes ……………………………………………………………… Installation of furniture ………………………………………………… Cost of repair furniture damaged during installation …………………… \$11,000 375 550 75 400 Instructions a. Compute depreciation expense for the years 2011 through 2014 under each depreciation method listed below: 1. Straight-line, with fractional years rounded to the nearest whole month. 2. 200 percent declining-balance, using the half-year convention. 3. 150 percent declining-balance, using the...

Premium Book value, Depreciation, Expense 538  Words | 6  Pages

### accounting for managerial decisions

full year's depreciation expense is to be recorded in 2013. The equipment was used 20 000 hours during 2013 and 24 000 hours during 2014. The number of expected hours over five years is 100 000. Clear Window is comparing the straight-line and reducing-balance depreciation methods. Of these two methods, which method creates the larger expense and larger tax savings in 2013? a. Straight-line depreciation creates the larger expense, while reducing-balance depreciation creates the...

Premium Asset, Balance sheet, Depreciation 683  Words | 5  Pages

### Tangible and Intangible Assets

possess physical substance,” (Kimmel, Weygandt, &amp; Kieso, 2010, p. 414). Types of intangible assets include patents, copyrights, trademarks, franchises, licenses, and goodwill. These assets would be classified as long-lived assets. DepreciationDepreciation is the process of allocating to expense the cost of a plant asset over its useful (service) life in a rational and systematic manner,” (Kimmel, Weygandt, &amp; Kieso, 2010, p. 402). Depreciable assets include land improvements, buildings...

Premium Amortization, Asset, Balance sheet 765  Words | 3  Pages

### A Case Study on Pressco, Inc. (1985)

budgeting. 3. To know the importance of government regulations regarding depreciation methods and tax implications in capital investment. 4. To prepare students in dealing with investment projects of a business. Areas of Consideration • Cost-reduction opportunity of replacing old equipments. • Elimination of investment tax credit for new equipment due to the new tax legislation. • Extended depreciation lives for new equipment under the new tax regulation. • Reduction of...

Premium Capital accumulation, Depreciation, Finance 643  Words | 5  Pages

### chapter 3 1

this period’s depreciation expense. To record accrued salaries expense. To record this period’s use of a prepaid expense. To record accrued interest revenue. To record accrued interest expense. To record the earning of previously unearned income. E Interest Expense 2,208 Interest Payable C Insurance Expense 2,208 3,180 Prepaid Insurance F Unearned Professional Fees 3,180 19,250 Professional Fees Earned D Interest Receivable 19,250 3,300 Interest Revenue A Depreciation Expense 3,300...

### Corporate Accounting Assignment

Aviator Airways Ltd and Eagle Airlines Ltd This comparative study of accounting policies adopted by two international airlines for the depreciation of aircraft, spares and spare engines provides an insight into the differences in accounting policy that may emerge, even when accounting practice in the jurisdictions involved is regulated. Non-current assets Depreciation Depreciable amount Useful Comparability of results Financial statement analysis Aviator Airways Ltd (Aviator) and Eagle Airlines...

Premium Asset, Depreciation, Fixed asset 1253  Words | 5  Pages

### Why Is Ifrs so Strong in Using Fair Value Instead of Historical Cost for Its Valuations of Property, Plant and Equipment?

Historical Cost the company carries the asset on the balance sheet at the purchase cost less any depreciation taken. At the time of sale, the company records a gain or a loss against the purchase cost of an asset less any depreciation if applicable. For example if Tom purchased an asset for \$5,000 and estimated depreciation expense of \$500 per yr for 10 yrs the cost of asset after the 1st yr less depreciation is \$4500. If the market value of the asset were \$4800 after one year in the open market Tom...

Premium Asset, Balance sheet, Depreciation 925  Words | 3  Pages

### Btandywine Healthcare

other than depreciation totaled 75% percent of revenues, and depreciation expense was \$1.5 million. All revenues were collected in cash during the year and all expenses other than depreciation were paid in cash. What were Brandywine’s 2007 net income, total profit margin, and cash flow? Net income = 12M * (1 - 75%) - 1.5M = \$1.5 million Total profit margin = \$1.5M/12M = 12.5% Cash flow = 1.5M + 1.5M = \$3 million Suppose the company changed its depreciation calculation...

Premium Depreciation, Double-entry bookkeeping system, Expense 333  Words | 3  Pages

### Stern Corporation (A)

property, plant, and equipment and accumulated depreciation accounts. Again the controller examined the December 31, 1997, balance sheet [see Exhibit 1 of Stern Corporation (A)]. Also reviewed were the following company transactions that were found to be applicable to these accounts: 1. On January 2, 1998, one of the factory machines was sold for its book value, \$3,866. This machine was recorded on the books at \$31,233 with accumulated depreciation of \$27,367. 2. Tools were carried on the books...

Premium Accounts payable, Accounts receivable, Asset 919  Words | 6  Pages

### Financial Statement Analysis

valuing the company (explain why)? Earnings on the income statement includes Demand Media’s \$32.1 million depreciation and amortization expenses, which more accurately represents the health of the company. The seemingly strong Operating Cash Flow of \$39.231 million in 2009 is misleading because the figure is excluding the company’s heavy content creation expenses by adding back depreciation and amortization. These expenses are instead allocated to Cash Flow from Investing Activities.  As an investor...

Premium Cash flow, Depreciation, Generally Accepted Accounting Principles 839  Words | 3  Pages

### Managerial Problem Set Intercoastal Electronics

................... Sales commissions.......................................................... Advertising and promotion ............................................. Administrative salaries.................................................... Depreciation ..................................................................... Interest on bonds ............................................................. Interest on short-term bank loan .................................... Property taxes ...........

Premium Accounts receivable, Asset, Balance sheet 966  Words | 5  Pages

### Week Three Exercise Assignment B

up-to-date inventory valuation on the balance sheet? FIFO (2) show the lowest net income for tax purposes? LIFO 5. Depreciation methods. Mike Davis Enterprises purchased a delivery van for \$40,000 in January 20X7. The van was estimated to have a service life of 5 years and a residual value of \$6,000. The company is planning to drive the van 20,000 miles annually. Compute depreciation expense for 20X8 by using each of the following methods: a. Units-of-output, assuming 17,000 miles were driven during...

Premium Accounting software, Accounts payable, Accounts receivable 1058  Words | 5  Pages

### Account Analsis

amortization / depreciation? What is the difference between depreciation and amortization? Amortization: Amortization is the process of decreasing, or accounting for, an amount over a period. Amortization is generally known as depreciation of intangible assets of a firm. Depreciation: Depreciation is a term used in accounting, economics and finance to spread the cost of an asset over the span of several years. Difference between depreciation and amortization: * Depreciation is used for fixed...

Premium Asset, Balance sheet, Depreciation 1122  Words | 5  Pages

### Health Services Management

service revenue \$840,000 Transfer to parent corporation \$10,000 Net assets released from temporarily-restricted accounts for operations \$120,000 TOTAL REVENUES \$970,000 Expenses Administrative expenses \$80,000 Depreciation expenses \$50,000 Interest expenses \$12,000 Labor expenses \$260,000 Supply expenses \$88,000 Total operating expenses \$490,000 Non-Expenses Bad debt expenses \$40,000 TOTAL EXPENSES \$1,020,000 NET...

Premium Depreciation, Expense, Generally Accepted Accounting Principles 443  Words | 3  Pages

### Reaction Paper on Accounting

land, plant and equipment and natural resources. An intangible asset has no physical substance. These will include good will, patent rights and copyrights. Land is not normally amortized because its useful life is assumed to be indefinitely long. Depreciation is process of converting the original cost of plant and equipment assets to expense. Depletion on the other hand is the process of converting the cost of the natural resource assets to expense. If the intangible assets are converted to expense...

Premium Asset, Balance sheet, Book value 1896  Words | 5  Pages

### Bean business finance week 1

\$34,630, costs of \$10,340, depreciation expense of \$2,520, and interest expense of \$1,750. If the tax rate is 35 percent, what is the operating cash flow, or OCF? Operating cash flow \$ 17283 Calculations: Sales - Cost - Depreciation = EBIT(Earnings Before Interest Taxes –Depreciation Amortization) 34630 - 10340 - 2520 = 21770 EBIT - Interest = Taxable Income 21770 - 1750 = 20020 Taxes (35%) = 20020 x .35 = 7007 Net income: 20020 - 7007 = 13013 EBIT + depreciation - less taxes = OCF  21770 +...

Premium Cash flow, Depreciation, Expense 536  Words | 4  Pages

### Cash Flow

Decrease in Prepaid Expenses 4,000,000.00 Increase in Accounts Payable 1,000,000.00 Decrease in Accrued Liabilities -2,000,000.00 Decrease in taxes payable -5,000,000.00 Increase in Deferred Taxes 5,000,000.00 Depreciation 11,000,000.00 Net cash provided by operating activities 1,000,000.00 Investing Activities Additions to Plant and Equipment -50,000,000.00 Decrease in Investments 20,000,000.00 Net cash provided bu investing activities ...

Premium Accounts receivable, Balance sheet, Cash flow 624  Words | 5  Pages

### Why Profit Does Not Equal Cash

vendor.  Cash flow reflects the cash that actually went out the door during a period. -       Capital expenditures do not count against profit directly.  A capital expenditure does not appear on the income statement when it occurs.   It is only the depreciation that is charged against revenue over time which is based on the useful life of the item that was purchased.   The cash flow reflects a different story as most items are paid for long before they may be fully depreciated on the profit and loss statement...

Premium Assignment, Cash flow, Depreciation 820  Words | 3  Pages

### Dsfd

Assets and Depreciation (A) Fixed Assets Fixed Assets except freehold land are carried at cost of acquisition, construction or at manufacturing cost, as the case may be, including pre-operative expenses in the case of self manufactured assets / plants / undertakings, less accumulated depreciation and amortisation. (B) Depreciation and Amortisation: (a) Leasehold land: Premium on leasehold land is amortised over the period of lease. (b) On Plant &amp; Machinery given on Lease: Depreciation on Plant...

Premium Accrual, Amortization, Asset 1882  Words | 7  Pages

### Making Capital Investment Decisions

Variable costs 345,300 Depreciation 96,000 EBIT \$ 202,500 Taxes@35% 70,875 Net income \$ 131,625 The OCF for the company is: OCF = EBIT + Depreciation – Taxes OCF = \$202,500 + 96,000 – 70,875 OCF = \$227,625 The depreciation tax shield is the depreciation times the tax rate, so: Depreciation tax shield = TcDepreciation Depreciation tax shield = .35(\$96,000) Depreciation tax shield = \$33,600 The depreciation tax shield shows us the...

Premium Asset, Book value, Cash flow statement 648  Words | 4  Pages

### Auditing Problems

accumulated depreciation and any impairment losses. 2. Revaluation model The item of PP&E is initially recognised at cost and subsequently measured at fair value less subsequent accumulated depreciation or impairment losses. Depreciation Depreciation of an asset begins when it is available for use, which is defined by the standard as occurring when the asset is in the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation methods ...

Premium Asset, Balance sheet, Book value 1177  Words | 5  Pages

### Chapter 6 and 7

a. Year 1 2 Incremental Earnings Forecast (\$000s) 1 Sales 2 Costs of good sold and operating expenses other than depreciation 3 Depreciation 4 EBIT 5 Income tax at 35% 6 Unlevered Net Income 39.0 41.6 FILL IN THE NUMERS USED TO DETERMINE UNLEVERED NET INCOME b. Free Cash Flow (\$000s) 1 2 7 Plus: Depreciation 8 Less: Capital Expenditures 9 Less: Increases in NWC 10 Free Cash Flow 29.0 29.6 FILL IN THE NUMERS USED...

Premium Corporate tax, Depreciation, Expense 1143  Words | 5  Pages

### Accounting Practical Questions

Part A On 1 July 2011, Kookaburra Ltd acquired an item of plant at a cost of \$200 000. The plant has an expected useful life of eight years, and Kookaburra Ltd adopts the straight-line method of deprecation. The tax depreciation rate for this type of plant is 25%. The company tax rate is 30%. Kookaburra Ltd measures plant at fair value. At 30 June 2012, Kookaburra Ltd determines the fair value of the plant to be \$186 000. Due to recent developments in plant technology, the remaining useful...

Premium Asset, Corporate tax, Depreciation 695  Words | 4  Pages

### assignment requirment

Less Expenses: Material Purchased \$300000 Factory Wages-Production line \$250000 Production Supervisor’s Salary \$35000 Rent \$80000 Council Rates \$5000 Sales Staff \$110000 Advertising \$18000 Equipment Depreciation \$25000 Electricity \$12000 Manager’s Salary \$80000 Truck Lease \$10000 Total Expense \$925000 Net Profit \$55000 Additional Information: There was virtually no beginning inventory of raw material, work in process...

Premium Cost of goods sold, Depreciation, Expense 485  Words | 4  Pages

### Accounts Receivable and Correct Marks

following terms is used to identify the process of expense recognition for property, plant and equipment? Choose one answer. | a. Amortization | | | b. Depletion | | | c. Depreciation | | | d. Revision | | Correct Marks for this submission: 5/5. Question 5 Marks: 5 Which method of depreciation is used by most U. S. companies for financial reporting purposes? Choose one answer. | a. Straight Line | | | b. MACRS | | | c. Double Declining Balance | | | d....

Premium Accounting software, Accounts payable, Accounts receivable 1026  Words | 7  Pages

### Brandywine Homecare

company’s performance during 2007. It reflects how much money the company brought in as revenues, how much spent on expenses, and the difference between the two is the net income profit. All figures above are in terms of millions. Excel rounded the depreciation value which was 1.5 to 2 and net income of 1.5 to 2 as well which gave total expense of 11 which is actually 10.5 million. I will attempt to explain the major components of this Income Statement. Revenue is the first major component...

Premium Asset, Balance sheet, Depreciation 1245  Words | 4  Pages

### Big Bazar vs Sahara Q Shop

Qstn. No.1: Calculate the annual depreciation expense that Delta and Singapore Airlines would record for each \$100 gross value of Aircraft. a. For Delta, what was its annual depreciation expenses (per \$100 of gross aircraft value) prior to July 1, 1986, From July 1, 1986 through March 31, 1993 and from April 1st, 1993 on? b. For Singapore, what was its annual depreciation expense (per \$100 of Gross aircraft value) prior to April1, 1989 and from April 1,1989 on?   |   |   |   | Delta Airlines...

Premium Airline, Avianca, Delta Air Lines 905  Words | 4  Pages