Chapter 12

Recognizing Depreciation, Impairments, and Depletion

In This Chapter

arrow Getting familiar with how depreciation affects the financial statements

arrow Considering the differences between costs and expenses

arrow Calculating depreciation

arrow Reducing the cost of natural resources with depletion

arrow Accounting for assets that are no longer useful

arrow Looking at the difference between tax and GAAP depreciation

This chapter is an introduction to a company’s tangible assets — assets that you can touch and feel, that have a physical presence. Tangible assets, also called fixed assets, include property, plant, and equipment (PP&E). Natural resources are another type of asset, which includes items such as oil, gas, and timber; we look at those assets in this chapter as well.

The chapter walks you through the types of costs that go on the balance sheet when the company initially buys or leases these assets. ...

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