How is the appropriate depreciation method determined? Weegy:
Four popular methods are: (1) straight-line, (2) units-of-output, (3) double-declining-balance, [ and (4) sum-of-the-years'-digits.A variety of approaches can be used to calculate depreciation.most companies elect to stay with one of the fairly basic techniques -- as they all produce the same "final outcome" over the life of an asset, and that outcome is allocating the depreciable cost of the asset to the asset's service life. Therefore, although you will now only be exposed to four methods, those methods are the ones you are most apt to encounter. ] Auto answered|Score 1|MissWitty|Points 188|User:
Has the concept of asset impairment changed accounting for long-lived assets under the historical cost model? If so, how? Note:
Both accounting models have similar recognition criteria, requiring that costs be included in the cost of the asset if future economic bene?ts are probable and can be reliably measured. [ [ Neither model allows the capitalization of start-up
costs, general administrative and overhead costs or regular
maintenance. However, both US GAAP and IFRS require that
the costs of dismantling an asset and restoring its site (that
is, the costs of asset retirement under FAS 143Accounting
for Asset Retirement Obligations or IAS 37) be included in the cost of the asset. Both models require a provision
for asset retirement costs to be recorded when there is a
legal obligation, although IFRS requires provisions in other
circumstances as well. Read more: www.scribd.com/doc/38214500/9/Long-lived-assets#page=31
] ] Auto answered|Score 1|mari1313|Points 51|Note:
I'm sorry that that wasn't a good answer. Please hold on while I contact an expert.Weegy:
Depreciation is the process of reducing the historical cost of an asset by an annual amount relating to the amount of asset usage. [ Most assets are recorded at historical costs by accounting departments; based on the type of asset, certain methods must be used to reduce the value of the asset each year. Depreciation affects the company financial statements, moving the depreciation amount from the asset value on the balance sheet to the depreciation expense on the income statement.
Several methods of depreciation are used to record the depreciation expense on the accounting books. The most popular methods include:
Straight-Line: This is the simplest depreciation method; it is calculated by subtracting the asset salvage value from the asset's historical cost, then dividing the remaining amount by the useful years of the asset. This creates a constant amount for companies to depreciate each year.
Declining Balance: The declining balance method is used for assets with shorter life spans for a company. This allows companies to deduct higher depreciation amounts early in the asset life and lower amounts as the asset is phased out of the company. Companies will usually determine what percentage of the asset will be used each year and multiply it by the asset value to determine annual depreciation.
Units of Production: Manufacturing companies may use this method for assets used for production purposes only. It is calculated by subtracting the salvage value from the historical asset cost; this amount is then divided by the total unit production of the machine to get a per-unit depreciation amount. Each month, the units produced are multiplied by the per-unit depreciation amount to calculate the expense.
When calculating depreciation for U.S. tax purposes, all assets entered into service by a company after 1986 must use the Modified Accelerated Cost Recovery System (MACRS). The Internal Revenue Service (IRS) provides asset classes for companies to determine the useful life and asset salvage value for tax purposes. ] Note:
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All Categories|No Subcategories|Expert answered|Rating 0| 11/19/2011 11:56:18 PM