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Depreciation & Inventory Cheat Sheet (DRAFT) by


This is a draft cheat sheet. It is a work in progress and is not finished yet.

Deprec­iation Basics

The cost of a plant asset consists of all necessary and reasonable expend­itures to acquire it and to prepare it for its intended use.

Salvage Value
This is the amount the owner expects to receive from disposing of the asset at the end of its benefit period. If the asset is expected to be traded in on a new asset, its salvage value is the expected trade-in value.

Useful Life
Useful life, also called service life, might not be as long as the asset's total productive life.

refers to the condition of a plant asset that is no longer useful in producing goods or services with a compet­itive advantage because of new inventions and improv­ements.

Stra­igh­t-line Method

Useful Life in Periods =
Cost- Salvage Value
Journal Entry
Debit Deprec­iation Expense Credit Acc. Dep. Machine

Units of Production Method