Depreciation is the decline in the future economic benefits of a depreciable non-current asset through wear and tear and obsolescence. It is an allocation process. It can be calculated by two main methods, each reflecting in a distinct prospect in the way the asset is used. Depreciation is to be treated as an estimated expense that does not set aside cash for the replacement of a non-current asset. In determining the cost of acquisition of the lathes, any capital expenditure made must be added to the purchase price of the lathes. This amount will be considered as the historical cost and will be used in calculating the depreciation expense
Depreciation is the allocation of the cost of a non-current asset less its estimated disposal value against revenue over the assets useful life. A depreciable asset is an asset that will be used over more than one accounting period and will gradually contribute to revenue over its useful life. However, it will give rise to future expenses as their future economic benefits are used up or expired. Examples of depreciable assets include machinery and motor vehicles.
Generally, most non-current assets, with the exception of land, decline in their potential to provide future economic benefit. There are three factors that contribute to this decline. They are, the deterioration of a non-current asset due to the use of it, technical obsolescence, whereby certain assets become out of date due to technical innovations and improvements on a comparative basis and the final, commercial obsolescence which is the process of certain non-current assets becoming redundant as the demands fall for the goods or service previously provided by the asset
Depreciation allocates the assets cost or depreciable amount over the estimated useful life of the asset to the entity. It is not a process of asset valuation. The cost of the asset less the accumulated depreciation is not intended to give the current market value of the asset as the asset purchased is not intended for re-sale but use in the business.
There are two methods of depreciating an asset, the straight-line method, and the reducing balance method. The straight-line method of depreciation allocates the same amount of depreciation expense being charged against revenue each accounting period of the assets useful life. This method is effective for assets that give a constant contribution of revenue per period. It provides a direct relationship between the depreciation expense and the asset cost.
The method of depreciation the company uses is the straight-line method. The straight-line method is the most common method of calculating deprecation; therefore, it makes logical sense that this is the method that Lowe's Home Improvement uses.
...and the useful life of the machine should be calculated. Then, depending on the method used, the total cost of the machine is considered as a long term asset and depreciated over the life expectancy of the asset.
John Deere Component Works (JDCW), subdivision of John Deere and Co. was in charged specifically of the manufacturing of tractor component parts. The demand for JDCW’s products had problems due to the collapse of farmland value and commodity prices. Numerous and constant failures in JDCW’s competition for bids, alerted top management to start questioning their current costing methods. As an outcome, the analysis has to be guided to research on the current costing methods with the intention of establishing legitimacy and to help the company in adopting a more appropriate costing system.
Vehicle depreciation also varies with a purchase or a lease. If someone is buying, the tax deduction will equal the full depreciation of assets per the I.R.S. schedule. If leasing it is optional to buy out the lease at the end of the term, rather than go by the I.R.S. schedule. With buying, the finance period can extend beyond the warranty period, unless warranty options are added. In contrast, with leasing, the warranty will last for the full term of the finance period no matter what.
For example, Chipotle incurred higher loss on disposal and impairment of assets because they company wrote down the value of the long-term assets of its ShopHouse restaurants, which were 15 non-Chipotle concept fast food restaurants, since the company was seeking strategic alternatives for the concept. Another example is Chipotle’s decision to not implement an internally developed accounting software, which lead to higher loss on disposal and impairment of assets in 2015 (CMG, 2017). As demonstrated by these two examples, loss on disposal and impairment of assets are often unusual and non-recurring. Thus, no projections are made for this extraordinary item, that is loss on disposal and impairment of assets are assumed to be zero for 2017 and
..., played God, abandoned his creation, and then hid any relation to the creature. Victor is quite at fault for the murders that take place in Mary Shelley's Frankenstein. True, the monster does know right from wrong, the difference is he was not brought up by his parents that way. How to live life is something that is learned and imprinted through experience and guidance. The monster was never fully given the chance to live because upon the day he arrived he was instantly rejected. Victor created the monster physically and emotionally within himself and in turn died by it.
The monster wanted revenge after he was cruelly shunned by his master, Victor. This led to the untimely death of William, Victor’s little brother. On the other hand, Victor desired retribution after the monster killed his family and friends. While both seemed to have validation for vengeance on the other, the plot of the story shows otherwise. Frankenstein was wrong in his actions on many occasions. The first, and most obvious reason, was by creating life. After doing so he then neglected his creation because he viewed it as disgusting and inferior. The monster, at that time (around Chapter 5), could be compared with a child. He/it had no idea of what was going on in the world and was looking for support from the only person he/it knew: Victor. By treating it the way he did, it gave the monster moral reasons to act the way it did throughout the story. Victor, on the other hand, only began to seek revenge after he had lost all of his family and friends. If he had looked to enact vengeance on the monster after the death of his little brother, that would be acceptable, but he did not care then; instead, he kept quiet and that led to the death of not one, but two. Only after his wife died did Victor start to care. As a result, Victor could be seen as petty for finally trying to destroy his
Frankenstein by Mary Shelley is an amazing story of a monster and a man. The main characters in the book are the monster and Victor, the creator of the monster. Victor Frankenstein is a scientist who was interested in bringing a body back to life from the dead. Therefore, he gathered all the parts of the human body to do this. Then one night he brought back this body back to life. That body was further known as the monster. Soon after it was created Victor leaves the monster to raise itself, and it becomes very ill-mannered. Further in the story, Victor’s brother gets murdered. People who also died in the story were: Victor’s father, family friend Justine, later wife Elizabeth, best friend Henry. However, even though the monster killed them all, he is not the main villain. In fact, Victor is ultimately responsible for all of these deaths.
Victor abandons the monster because he didn't turn out how he wanted him to be. That's one of the main reasons why the monster acted the way he did.It's also the fact that he was basically thrown away before he could even say his first word. The monster was only doing what all children do when they are brought to life, seek their mother or in this case their creator. When Victor ran out on the monster the monster had no clue what was going on. It expected Victor to come back, so when he didn’t you can imagine how much hurt the monster must of felt. His own creator didn’t want him because he didn’t look
Technically speaking, the monster does want to see him suffer, and tear away and possibility he has left for happiness, but Victor’s ego is too large to see the truth. Granted, killing him would cause him to suffer, if the monster wanted that to happen he would’ve murdered Victor a while ago. “On that night he had determined to consummate his crimes by my death (Shelley 192, 193).” This quotation is an interesting one, because it has two important parts to it. One part that has been covered before is Victor thinking the monster is just out to murder himself, when in actuality a clear-minded individual could tell he has other plans. The other part that’s interesting to note out of that portion is when he says “his crimes”, eluding to what the monster has done. Now this is more a controversial topic, but it creates the question; is Victor responsible for what his creation has done? The consensus is that he is responsible. So this is another point in which Victor is not yet taking responsibility for what his creation has done and for the murders of his family and friends. That is another minor piece that can fit into the umbrella of describing Victor as a bad person, and how one could
This paper will cover the facts about goodwill impairments and how it has a big effect on companies. In the past, goodwill was not commonly purchased from company to company but since it is there have been come changes in statements issued in FASB. This will also be discussed in this paper. Of course, goodwill is considered an intangible asset therefore I will be sure to explain the significance of these types of assets. After reading this paper you will be able to have discussions about goodwill with great knowledge.
Intangible assets are assets that cannot be physically held, such as copyrights, brand names, trademarks, goodwill, and patents. There are two kinds of intangible assets, definite and indefinite. Definite assets have a useful life and would be amortized ever year to decrease the value, such as trademarks and patents. Indefinite do not have a definite life time and would last as long as the company stays in business. Definite assets need to be amortized based on their useful life by determining the pattern of use for the asset. For example, if a company uses an asset 40% the first year, 30% the next year, and 15% the next 2 years, then it would amortize the value following that pattern. If they do not know the pattern they would use the straight-line
Historical cost method, over a period of time has been subject to many criticisms, especially as it considers the acquisition cost of an asset and does not recognise the current market value. Historical costs is only interested in cost allocations and not in the value of an asset. While it tells the user the acquisition cost of an asset and its depreciation in the following years, it ignores the possibility that the current market value of that asset may be higher or lower than it suggests.
When compared to the physical capital maintenance concept, the financial capital maintenance concept is the better choice for standard setting when distinguishing between a return of capital and a return on capital. The main argument in favor of physical capital maintenance is that it provides information that has better predictive value, confirmatory value, and is more complete. However, due to agency theory, prospect theory, and positive accounting theory, neutrality and completeness under physical capital maintenance would be impaired so gravely that predictive value and confirmatory value become inefficacious. As a result, financial capital maintenance, with its use of historical cost, is able to provide information to decision makers with stronger confirmatory value and predictive value.
The main method used by businesses to classify assets is to split them into tangible assets, which have a separate existence from the business (examples of which would include buildings, land and machinery), and intangibles which do not. Some clear examples of intangibles include goodwill, patents, research and development expenditure and trademarks. Intangible assets are usually created within the organisation over a period of time, by the company itself, rather than acquired from an external source and are rarely sold off individually they can normally only be sold in conjunction with associated tangible assets.