After studying this chapter, you should be able to:
- 1 Explain the concept of depreciation.
- 2 Identify the factors involved in the depreciation process.
- 3 Compare activity, straight-line, and diminishing-charge methods of depreciation.
- 4 Explain component depreciation.
- 5 Explain the accounting issues related to asset impairment.
- 6 Explain the accounting procedures for depletion of mineral resources.
- 7 Explain the accounting for revaluations.
- 8 Explain how to report and analyze property, plant, equipment, and mineral resources.
Here Come the Write-Offs
The credit crisis starting in late 2008 affected many financial and non-financial institutions. Many of the statistics related to this crisis are sobering, as noted below.
- In October 2008, the FTSE 100 in the United Kingdom suffered its biggest one-day fall since October 1987. The index closed at its lowest level since October 2004.
- The U.S. Dow Jones Industrial Average fell below the 8,000 level for the first time since 2003.
- Germany's benchmark DAX tumbled after the collapse of the proposed rescue plan for Hypo Real Estate (DEU).
- Tightening credit and less disposable income led to Japanese electronic groups losing value; the Nikkei fell to its lowest point since February 2004.
- The Hong Kong Hang Seng dropped in line with the rest of Asia, closing below 17,000 points for the first time in two years in October ...