Chapter 7: Plant Assets, Natural Resources, & Intangibles EXHIBIT 7-1 Long-Lived Assets and Related Expense Accounts

EXHIBIT 7-2 Capital Expenditures vs. Immediate Expenses

EXHIBIT 7-3 Depreciation: Allocating costs to periods in which revenues are generated

EXHIBIT 7-4 Depreciation Computation Data

EXHIBIT 7-5 Straight-Line Depreciation Schedule for Truck

EXHIBIT 7-6 Units-of-Production (UOP) Depreciation Schedule for Truck

EXHIBIT 7-7 Double-Declining-Balance (DDB) Depreciation Schedule for Truck

EXHIBIT 7-8 Depreciation Patterns Through Time

EXHIBIT 7-9 Depreciation Methods Used by 600 Companies

For reporting in the financial statements, straight-line depreciation is the most popular method. As we shall see, however, accelerated depreciation is most popular for income-tax purposes. (Harrison, 02/2013, pp. 412-413)EXHIBIT 7-10 The Cash-Flow Advantage of Accelerated Depreciation for Tax Purposes

EXHIBIT 7-11 Modified Accelerated Cost Recovery System (MACRS)

EXHIBIT 7-12 Normal Relationship and Impaired Relationship Among Values of an Asset

In a normal relationship, estimated future cash flow represents the largest of the three amounts, followed by fair value, and then net book value. An impaired relationship exists if net book value exceeds estimated future cash flows. The process of accounting for asset impairment requires two steps:Step 1:Test the asset for impairment.If net book value > Estimated future cash flows, then the asset is impaired.Step 2:If the asset is impaired under Step 1, compute the impairment loss.Impairment Loss = Net Book Value Fair Value (Harrison, 02/2013, pp. 426-427)

EXHIBIT 7-13 Reporting Investing Activities on FedExs Statement of Cash Flows