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Change in Estimate: Depreciation definitions Flashcards

Change in Estimate: Depreciation definitions
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  • Useful Life
    Estimated period an asset is expected to provide economic benefits before being retired or replaced.
  • Residual Value
    Expected amount to be recovered at the end of an asset's useful life, after all depreciation is accounted for.
  • Change in Accounting Estimate
    Update to prior assumptions, such as useful life or residual value, affecting only future financial calculations.
  • Straight-Line Depreciation
    Method allocating equal depreciation expense to each year of an asset's useful life.
  • Depreciation Expense
    Annual allocation of an asset's cost, minus residual value, over its useful life.
  • Accumulated Depreciation
    Total depreciation recorded on an asset since its acquisition, reducing its book value.
  • Net Book Value
    Asset's original cost minus accumulated depreciation, representing its current value on the books.
  • Salvage Value
    Estimated value expected to remain after an asset's useful life is fully consumed.
  • Initial Cost
    Original purchase price paid to acquire an asset, before any depreciation is applied.
  • Remaining Depreciable Value
    Amount left to be depreciated, calculated as initial cost minus accumulated depreciation and salvage value.
  • Partial Year Depreciation
    Depreciation calculated for a fraction of a year when an asset's estimate changes mid-year.
  • Financial Statement
    Formal record summarizing a company's financial activities, including asset values and depreciation.
  • T Account
    Visual tool used in accounting to track changes in specific accounts, such as accumulated depreciation.