The spending of billions of dollars each year on research and development of new products is a striking characteristic of U.S. industry. The annual research and development’ expenditures of some companies often exceed $1 ,.billion and account for a substantial percentage of their total costs and expenses In the past, some companies treated all research and development costs…
INTANGIBLE ASSETS As the word intangible suggests, assets in this classification have no physical substance. Leading examples are goodwill. patents, and trademarks. Intangible assets are classified in the balance sheet as a subgroup of plant assets. However, not all assets that lack physical substance are regarded as intangible assets. An account receivable, for example, has no physical attributes but…
When depreciable assets are disposed of at any date other tha’n the end of the year. tin entry should be made to record depreciation for the fraction of the year ending with the date of disposal. If the half-year convention is in use. six months’ depreciation should be recorded on all assets disposed of during the year. In…
To illustrate the double-declining-balance method, consider our example of the $17,000 delivery truck. The estimated useful life is 5 years; therefore, the straight-line depreciation rate is 20% (l -;-5 years). Doubling this straight-line rate indicates an accelerated depreciation rate of 40%. Each year, we will recognize as depreciation expense 40% of the truck’s current book value, as follows: 150%-Declining-Balance…
We first introduced the concept of depreciation in Chapter 3. We will now expand that discussion to address such topics as residual values, alternative depreciation methods,and depreciation (or cost recovery) for income tax purposes Allocating the Cost of Plant and Equipment over the Years of Use Earlier in this chapter, we described a delivery truck as…
COMMENTARY STRANDED ASSETS WHO SHOULD FOOT THE BILL? A $50 billion-a-year battle is raging over a herd of white elephants. Electric and phone companies fear that once deregulated, they will be stuck with annual costs on that scale for the care and feeding of the herd-namely, assets such as nuclear power plants and obsolete telephone switchss that are…
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