Chapter 11
Depreciation
p 525 E4
Straight line, activity based, sum of years digits, double declining balance
Accelerated Dep is an important vocabulary word
-our book uses Decreasing Charge
skip Special Depreciation Methods
p 531 E6
partial year - straight line only
be aware of table on page 531 for SYD and DDB
SYD - full year then convert to partial
partial year convention or policy
p 532 E13 or E11
Change in estimate
p 533
Impairment
p 537-39
Depletion = activity based depreciation for Natural Resources
Costs to capitalize
acquisition costs
if subsequent exploration efforts are successful => Capitalize
if subsequent exploration efforts are NOT successful => expense
exploration costs
Full Cost method
Capitalize all exploration costs
Successful Efforts method only capitalize if minerals are found
development costs
intangible development costs capitalize in depletion base
tangible development costs capitalize as PP&E
restoration costs (estimated restoration costs)
capitalize in depletion base
p 539
Although we are not covering Oil Reserve Recognition Accounting, the "Continuing
Controversy" section covering oil reserves is a good example of the political
environment in which the accounting profession operates and in which accounting
standards are developed.
APP 11A
p 547 E 25
E6
read thru Measuring Impairments on Page 535
MACRS
3-5-7-10-15-20 year lives
3-10 DDB (200%) half-year convention
10-20 150% half-year convention
partial year
CH 10
Capitalization of Interest
p 475
capitalization period
p 477
E 8 or P 6
expenditures have been made
activities necessary to prepare the asset for its intended use are in progress
interest costs are being incurred
weighted average accumulated expenditure
appropriate interest rate