Property-Plant-Equipment: Depreciation

Flashcards covering concepts related to Property-Plant-Equipment depreciation methods and calculations.

Depreciation Expense

The annual charge to allocate the cost of a tangible asset over its useful life.

Accumulated Depreciation

The total depreciation expense that has been recognized to date for an asset.

Straight-line Depreciation

A method of depreciation where the same amount is expensed each year over the asset's useful life.

Residual Value

The estimated value an asset will realize upon its sale at the end of its useful life.

Useful Life

The estimated duration in years that an asset will be used in business operations.

Sum-of-the-years’-digits

A method of depreciation that accelerates the expense recognition by applying a formula based on the asset's remaining useful life.

Double-declining balance

A method of depreciation that applies twice the straight-line rate to the book value of the asset.

Units of Production

A depreciation method that bases expense on the asset's usage or output.

Book Value

The value of an asset after deducting accumulated depreciation from its cost.

Salvage Value

Another term for residual value, representing the expected sale value of an asset at the end of its useful life.