chapitre9.py

Created on December 04, 2025
1.31 KB
# CHAPTER 9 - DEPRECIATION
# --------------------------------
# PURPOSE :
# spread cost of long-term assets
# over useful life (PPE)
# --------------------------------
# STRAIGHT-LINE (SL) :
# Dep Exp =
# (Cost - Residual Value) /
# Useful Life
# same amount each year
# --------------------------------
# DECLINING-BALANCE (DB) :
# most common = Double-Declining
# Rate = 2 / Useful Life
# Dep Exp = Rate * Book Value
# Book Value = Cost - Accum Dep
# stop when BV = Residual Value
# --------------------------------
# JOURNAL ENTRY (both methods) :
# Dr Depreciation Expense
# Cr Accumulated Depreciation
# --------------------------------
# ACCUMULATED DEPRECIATION :
# contra-asset ; reduces asset
# Book Value = Cost - Accum Dep
# --------------------------------
# KEY DEFINITIONS :
# Cost = price + costs to make
# asset ready for use
# Residual Value = expected final value
# Useful Life = years of use
# --------------------------------
# PARTIAL YEAR (SL or DB) :
# Dep for period =
# annual Dep * (months/12)
# --------------------------------
# DISPOSAL OF ASSET :
# Book Value = Cost - Accum Dep
# if Cash > BV -> Gain
# if Cash < BV -> Loss
# --------------------------------
# EXAM REMINDERS :
# SL -> constant Dep each year
# DB -> Dep decreases each year
# only Dep Expense in IS
# BV shown on Balance Sheet