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Chapter 11:
Depreciation, Impairments, and Depletion
Prepared by
Krish Ranganathan, Angelo State University
San Angelo, Texas
* Questions to be answered:
What is the depreciable base of the asset?
What is the asset’s useful life?
What method of cost apportionment is best for
the asset in question?
Decreasing Fractions
12/31/2018 Intermediate Accounting, 10th 12
Edition, Ch. 11 (Kieso et al.)
Sum-of-the-years’-digits (SYD) method
4. Depreciation Schedule
3. Depreciation Schedule
Sum of expected
Sum of expected
future net cash flows
future net cash flows
from use and disposal
from use and disposal
of asset is
of asset is less than
equal to or more than
the carrying amount
the carrying amount
Up to 1980-end, same as
1. Straight line financial methods.
2. Double declining bal
3. Sum of the years Beginning with 1981,
4. Units of production tax methods changed.
Tax Depreciation Methods
• 1998 $18,500
• 1999 $19,000
• 2000 $20,000
• 2001 or 2002 $24,000
• 2003 and thereafter $25,000
12/31/2018 Intermediate Accounting, 10th 43
Edition, Ch. 11 (Kieso et al.)
MACRS (1987 and later): Example
(49,000 * 0.32)
MACRS depreciation [2001] = $ 15,680
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