# Accounting for Asset Depreciation Flashcards

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Price of Land / Units of Natural Resource = Price for Each Unit of Natural Resource. Units of Natural Resource Extracted in a Period of Time x Price = Depletion

This is used to measure and give a cost to the rate at which resources are extracted from land. It is noted on a company's income statement and calculated using units of production.

These methods for finding depreciation are used for objects that see more wear in the first years of use. Examples include the double declining balance and the sum of years' digits.

1 + 2 + 3 + 4 +5 = 15. Year one depreciation = 5 /15 = 1/3 or roughly 0.3. 5,000 x 0.3 = 1,500 in depreciation.

This records the highest depreciation in the first year. You add each year of the item's life together in this method and then divide the year by this total to find the depreciation percentage.

50,000 x 20% = 10,000 in depreciation on a yearly basis.

You find depreciation with this method by taking the initial cost and multiplying it by twice the standard depreciation rate. For an item with a life of ten years, the standard rate would be 10%.

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## Flashcard Content Overview

Checking out this set of flashcards can give you the opportunity to review the following methods that can be utilized to calculate depreciation:

- Double Declining Balance
- Sum of Years' Digits
- Units of Production
- Straight-Line

You'll also be able to focus on how depreciation is recorded on accounting documents. Additionally, these cards cover the method used to determine depletion.

You find depreciation with this method by taking the initial cost and multiplying it by twice the standard depreciation rate. For an item with a life of ten years, the standard rate would be 10%.

50,000 x 20% = 10,000 in depreciation on a yearly basis.

This records the highest depreciation in the first year. You add each year of the item's life together in this method and then divide the year by this total to find the depreciation percentage.

1 + 2 + 3 + 4 +5 = 15. Year one depreciation = 5 /15 = 1/3 or roughly 0.3. 5,000 x 0.3 = 1,500 in depreciation.

These methods for finding depreciation are used for objects that see more wear in the first years of use. Examples include the double declining balance and the sum of years' digits.

This is used to measure and give a cost to the rate at which resources are extracted from land. It is noted on a company's income statement and calculated using units of production.

Price of Land / Units of Natural Resource = Price for Each Unit of Natural Resource. Units of Natural Resource Extracted in a Period of Time x Price = Depletion

100,000 / 1,000 = $100

100 x 200 = 200,000

200,000 = depletion expense.

These accounts show the current value of an asset. They are usually used for accumulated depletion and accumulated depreciation.

This method for finding depreciation is based on how much you use the tool being depreciated. It shows how much yearly use a tool gets most accurately.

You use this depreciation method by dividing the cost of a machine by the years you expect it to last. This gives you the yearly depreciation. You subtract this amount every year.

40,000 / 20 = 2,000. This truck depreciates $2,000 every year, including the fourth.

This represents the value a piece of equipment loses as it is used. Subtract this from an item's initial price to find it's book value.

You record this number on the income statement as an expense. It is also reported on the balance sheet, where the total depreciation over time is noted.

40,000 / 20 = 2,000. 2,000 x 5 = 10,000. 40,000 - 10,000 = 30,000.

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Accounting 202: Intermediate Accounting II11 chapters | 72 lessons | 12 flashcard sets

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