| A | B |
|---|
| Land | Cost, closing (title/att'y fee); R E commissions, property tax |
| Land Improvements | Parking Lots, fences, landscaping, all exp. to utilize improvement |
| Buildings | Cost of purchase/construction; closing cost, real estate commission |
| Constructed buildings include | contract price/architect fees; permits, excavation cost; capitalized interest |
| Equipment | Cost of equip, ins. in transit, sales tax, shipping charges, costs for assemby |
| Depreciation Myths | Not process of asset valuation; Doesn't represent accumulation of cash for replacement |
| Depreciation Facts 1 | Way of allocating cost of assets in rational manner over useful life of assets |
| Depreciation Facts 2 | Depreciate land improvements, buildings and equip (not land) |
| Reason to depreciate | Asset’s value diminishes due to wear/tear; technological obsolescence |
| Straight Line Depreciation | Cost-Salvage Value=Depreciable Cost; then: Annual Depreciation=Depreciable Cost/Estimated Useful Life |
| Units of Activity | Uses depreciable cost divided by a total activity level to arrive at a per-unit cost. The per unit cost is multiplied times the level of activity for a particular year. |
| Double-Declining Balance | uses twice the rate of straight line |
| Capital Expenditure | If asset’s life or productivity or increased |
| Revenue Expenditure | Expensed as period costs |
| Intangible Assets | Amortize over legal life or useful life, whichever is shorter |
| Goodwill | recorded only when there is an exchange transaction; where it has an indefinite useful life |
