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3 cards from this section. Quick, good the night before a test.
What are the two main types of equipment costs?
Think of costs you pay regardless of usage versus those incurred when using the equipment.
Define depreciation in simple terms.
What happens to the value of equipment as it ages?
Which cost is incurred regardless of equipment usage?
Think about which costs remain fixed.
True or False: The Straight Line Method allows for variable depreciation rates.
Consider how the method calculates depreciation.
A crane bought for $500,000 has an estimated salvage value of $50,000 with a tire cost of $30,000. Calculate the annual depreciation using the Straight Line Method over 15 years.
Use the given values and the Straight Line Method formula.
Discuss when it would be beneficial to use accelerated depreciation methods over the Straight Line Method in project accounting.
Think about cash flow impacts!
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