Property-Plant-Equipment and Depreciation

These flashcards cover key concepts related to property, plant, equipment, and their depreciation calculations as outlined in the lecture.

Depreciation

The process of allocating the cost of a tangible asset over its useful life.

Residual (salvage) value

The estimated amount that an asset is expected to sell for at the end of its useful life.

Useful life

The period over which an asset is expected to be used.

Accumulated depreciation

The total depreciation expense that has been recognized against an asset since it was acquired.

Book value

The value of an asset after accounting for depreciation; calculated as cost minus accumulated depreciation.

Change in estimate

A revision of prior estimates of residual value or useful life that affects future depreciation calculations.

Depreciation expense calculation

For an asset, it is determined by dividing the book value less residual value by the remaining useful life.

Estimated useful life
(Example: 2035)

Determining the period a company expects to use the asset before it is retired or sold.

Fraction (4/10)
(Usage in depreciation)

Used to indicate the portion of the remaining useful life relative to the total estimated life of the asset.