Ch 9: Accounting for Depreciation
About This Chapter
Accounting for Depreciation - Chapter Summary and Learning Objectives
When making accounting projections for organizations, there are various factors to consider to see the big financial picture. One of those factors includes depreciation, which is the rate at which an item loses its value. The materials in this chapter discuss what causes depreciation, how to calculate depreciation, and additional calculation considerations. After you go through each individual lesson, you should be thoroughly acquainted with the following concepts:
- Depreciation methods
- Calculations for partial-year and accelerated depreciation
- The effects of estimation changes
- Determining the accumulated rate of depreciation
- Formulas for figuring out depreciation expenses
- Common practices for recording depreciation rates
| Lesson | Objective |
|---|---|
| Methods of Depreciation | Identify the three distinct depreciation methods. |
| Accelerated Depreciation Methods | Establish the rate at which large vehicles and office equipment depreciate through two typical calculation methods. |
| Partial-Year Depreciation & Changes in Estimates | Decipher depreciation formulas for taxes, investigate the partial-year depreciation rate for bigger items, and discuss how estimation changes can alter depreciation calculations. |
| Accumulated Depreciation: Definition & Formula | Predict long-term depreciation rates for items, explain how to record these rates in ledgers, and figure out the current value of any asset. |
| How to Calculate Depreciation Expense: Definition & Formula | Study the three most used methods for determining depreciation expense calculations. |
| Reporting Depreciation on the Balance Sheet | Compare depreciation rates listed on income statements vs. balance sheets and discuss why these numbers do not always match. |
1. Methods of Depreciation
After watching this video lesson, you will understand the differences between the different depreciation methods that are available to you. We will discuss three different methods depending on how you use the equipment that you want to calculate the depreciation for.
2. Accelerated Depreciation Methods
When it comes to calculating depreciation amounts for large office equipment or vehicles, there are two common methods that allow you to calculate more depreciation in the first few years of the product's life. Learn about them in this video lesson.
3. Partial-Year Depreciation & Changes in Estimates
This video lesson will teach you about depreciation calculations for taxes and how to calculate partial-year depreciation for large items that you own for just part of the year. Learn how changes in estimates may affect these calculations.
4. Accumulated Depreciation: Definition & Formula
Assets such as equipment and vehicles lose value over time, but how do you show that on your accounting books? This lesson will demonstrate how to account for depreciation over the course of multiple years and calculate an asset's current value.
5. How to Calculate Depreciation Expense: Definition & Formula
As property wears out, it loses some of its value, which is called depreciation. In this lesson, we will learn three of the most common methods of calculating depreciation expense, including the straight-line method.
6. Reporting Depreciation on the Balance Sheet
In this video lesson, we talk about how to report depreciation on the balance sheet versus the income statement. Learn why the numbers may be different.
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Other Chapters
Other chapters within the Accounting 302: Advanced Accounting course
- Business Ownership Types
- Key Accounting Concepts
- Journals & Ledgers in Accounting
- Accounting Equations & Formulas
- Financial Statements, Balance Sheets & Income Statements
- Analyzing Financial Statements
- Financial Statement Ratios
- Accounting for Inventory
- Accounting for Compensation, Taxes & Liabilities
- Adjustments & Closing Entries
- Corporate Accounting
- Departmentalized Accounting
- Taxation for Corporations
- Business & Financial Forecasting
- Required Assignments for Accounting 302
- Studying for Accounting 302
