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    1) Depreciation and depletion are accounting methods used to allocate the cost of long-term assets over multiple periods. 2) Depreciation is used for tangible assets while depletion is used for natural resources. An example is provided to calculate depletion expense for an oil well over several years. 3) Key factors in depletion calculations include acquisition cost, estimated recoverable units, units extracted in each period, salvage value, and estimated useful life of the resource. The goal is to systematically allocate the investment cost over the periods that benefit from use of the asset.

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    1) Depreciation and depletion are accounting methods used to allocate the cost of long-term assets over multiple periods. 2) Depreciation is used for tangible assets while depletion is used for natural resources. An example is provided to calculate depletion expense for an oil well over several years. 3) Key factors in depletion calculations include acquisition cost, estimated recoverable units, units extracted in each period, salvage value, and estimated useful life of the resource. The goal is to systematically allocate the investment cost over the periods that benefit from use of the asset.

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    9 views3 pages

    Depreciation and Depletion

    Uploaded by

    ncq6dmzmp4
    1) Depreciation and depletion are accounting methods used to allocate the cost of long-term assets over multiple periods. 2) Depreciation is used for tangible assets while depletion is used for natural resources. An example is provided to calculate depletion expense for an oil well over several years. 3) Key factors in depletion calculations include acquisition cost, estimated recoverable units, units extracted in each period, salvage value, and estimated useful life of the resource. The goal is to systematically allocate the investment cost over the periods that benefit from use of the asset.

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    of 3

    DEPRECIATION AND DEPLETION

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