• relatively long life
• held for use rather than for resale
• does not become incorporated as part of the product
• tangible in nature
• used repeatedly to furnish service

• Measured by the current cash equivalent price of acquiring the asset, plus all expenditures necessary to get the asset in the condition and location that it is to be used.

• If considerations other than cash are given for the assets, the fair market value of such considerations at the time of the transaction is the proper measure of the cost of the asset acquired.

• cash purchase--invoice price, freight, installation charges and other costs involved with the purchase of the asset

• discounts, if any, should be deducted from the cost; discounts not taken should be regarded as interest cost.

• Maximum amount to be recorded should not exceed a figure higher than that which it could be purchased for in the market.

• No reason for writing the asset up to a higher amount.

• When expenditures for improvements are significant in amount, temporary in nature, of varying life spans, this account should be used.

Defined -- Depreciation is the systematic and rational allocation of the historical cost of an asset, less its salvage value, over its estimated useful life. Depreciation is an allocation process as opposed to a valuation process.

• Basic purpose of depreciation is the spreading of the cost of a plant asset over its useful life and the reflection of this allocated cost in the income determination for a given accounting period.

• Total depreciation = historical cost - salvage value

Straight-line
Units of production
Accelerated methods:
    Sum-of-the-years-digits method
    Fixed percentage on a declining balance -- theoretical; not usually used.
    Double declining balance method

Special Depreciation methods
Group and composite methods
Retirement and Replacement methods
Inventory method
Annuity and Sinking fund methods