Term
| Method; Sum of the years digits |
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Definition
| add to get the denominator, it stays the same but the numerator changes. include salvage value when getting depreciate cost |
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Term
| Declining balance method of depreciation |
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Definition
| Do not use salvage value for computing depreciate cost but depreciate ONLY to the salvage value |
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Term
| Composite depreciation rate |
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Definition
| calculate depreciation per year (straight line) individually, then add them up and divide by the total original cost |
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Term
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Definition
| Total depreciation base/ total depreciation per year |
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Term
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Definition
| calculate the BOOK VALUE to the date of the revision and re-calculate the entire rate. Remember to use the BOOK VALUE to re-calculate |
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Term
| definite lived assets impairment test |
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Definition
1) recoverability test- future cash flows less than the CARRYING VALUE?
2)Impairment loss- excess of carrying amount over FAIR VALUE (if need be minus disposal) |
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Term
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Definition
Loss on impairment
Depreciation (on the asset) |
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Term
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Definition
Inventory
Asset (to be depleted) |
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Term
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Definition
| Net Sales÷Average total assets |
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Term
| Return on assets calculation |
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Definition
[Profit margain on sales (Net income/ Net sales)]*
[Asset turnover (net sales/Average total assets)]
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