Chapter 10

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# Chapter 10 - PowerPoint PPT Presentation

Plant Assets, Natural Resources, and Intangible Assets. Chapter 10. Accounting Principles, Ninth Edition. Depreciation. Declining-Balance. Decreasing annual depreciation expense over the asset’s useful life. Declining-balance rate is double the straight-line rate.

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Plant Assets, Natural

Resources, and

Intangible Assets

Chapter10

Accounting Principles, Ninth Edition

Depreciation

Declining-Balance

• Decreasing annual depreciation expense over the asset’s useful life.
• Declining-balance rate is double the straight-line rate.
• Rate applied to book value.

Illustration 10-13

SO 3 Compute periodic depreciation using different methods.

Depreciation

Illustration: (Declining-Balance Method)

Illustration 10-14

2010

13,000

40%

\$ 5,200

\$ 5,200

\$ 7,800

2011

7,800

40

3,120

8,320

4,680

2012

4,680

40

1,872

10,192

2,808

2013

2,808

40

1,123

11,315

1,685

2014

1,685

40

685*

12,000

1,000

2010 Journal Entry

Depreciation expense 5,200

Accumulated depreciation 5,200

* Computation of \$674 (\$1,685 x 40%) is adjusted to \$685.

Depreciation

Comparison of Depreciation Methods

Illustration 10-15

Illustration 10-16

SO 3 Compute periodic depreciation using different methods.

Depreciation for Partial Year

The following five slides are included to illustrate the calculation of partial-year depreciation expense.

The amounts are consistent with the previous slides illustrating the calculation of depreciation expense.

SO 3 Compute periodic depreciation using different methods.

Depreciation for Partial Year

Illustration: Barb’s Florists purchased a small delivery truck on October 1, 2010.

Illustration 10-7

Required:Compute depreciation using the following.

(a) Straight-Line.

(b) Units-of-Activity.

(c) Declining Balance.

SO 3 Compute periodic depreciation using different methods.

Depreciation for Partial Year

Illustration: (Straight-line Method)

SO 3 Compute periodic depreciation using different methods.

Depreciation for Partial Year

Illustration: (Units-of-Activity Method)

Illustration 10-12

2010

15,000

\$ 0.12

\$ 1,800

\$ 1,800

\$ 11,200

2011

30,000

0.12

3,600

5,400

7,600

2012

20,000

0.12

2,400

7,800

5,200

2013

25,000

0.12

3,000

10,800

2,200

2014

10,000

0.12

1,200

12,000

1,000

2010 Journal Entry

Depreciation expense 1,800

Accumulated depreciation 1,800

SO 3 Compute periodic depreciation using different methods.

Depreciation for Partial Year

Illustration: (Declining-Balance Method)

SO 3 Compute periodic depreciation using different methods.