الأصول النباتية والموارد الطبيعية

Plant Assets, Natural Resources, and Intangible Assets

• A plant asset is a long-term asset that cannot be easily converted to cash within a year.
• Plant assets include land (not depreciated), buildings, machinery, equipment, furniture and fixtures, and vehicles.

Depreciation Expense

• Depreciation expense is the reduction in the value of a fixed asset over accounting periods.
• Depreciation Expense = (Cost of Asset - Residual Value) / Estimated Life of Asset

Accumulated Depreciation

• Accumulated depreciation is the sum of depreciation expense from the purchase date to the balance sheet date.
• Accumulated depreciation is a contra-asset account with a credit balance.
• It reduces the carrying value (net book value) of a fixed asset.
• Land is the only plant asset that isn't depreciated as its value remains constant over time.

Cost of an Asset (Historical Cost)

• The cost of an asset is the total price a company pays to purchase it.

Useful Life of an Asset

• The useful life of an asset is the number of periods/years in which the asset can be productive or useful.

Residual Value (Salvage Value)

• The residual value is the amount the company can sell the asset at the end of its useful life.

Book Value

• The book value of an asset is its value recorded on the balance sheet.
• Book Value = Cost - Accumulated Depreciation

Straight-Line Method of Depreciation

• In this method, the asset's value depreciates equally each accounting period.
• Depreciable Cost = Asset Cost - Salvage Value
• Depreciation Rate per Year = 100% / Useful Life (in years)
• Annual Depreciation Expense = Depreciable Cost × Depreciation Rate per Year.
• Accumulated depreciation must equal the depreciable cost.
• Last book value must equal the salvage value.

Units of Activity Method of Depreciation

• Under this method, the useful life of an asset is expressed in terms of total units of production.
• Depreciable Cost = Asset Cost - Salvage Value
• Depreciable Cost per Unit = Depreciable Cost / Total Units of Activity (life in units)
• Annual Depreciation Expense = Units of Activity per year × Depreciable Cost per unit.

Declining-Balance Method of Depreciation

• This method recognizes greater depreciation in the early years of an asset's life and less in later years.
• Declining Balance Rate (Double) = 2 × (100% / Useful Life in years)
• Annual Depreciation Expense = Beginning Book Value × Declining Balance Rate.
• This method doesn't use depreciable cost for annual depreciation calculation.
• At the beginning of the first year, book value is the cost of the asset.
• Accumulated depreciation at the beginning is zero.
• Salvage value limits the total depreciation. Depreciation stops when the book value equals salvage value.