Chapter 11, Problem 11.17BYP

1.

To determine

Amortization:

Amortization is the process of allocating the value of the intangible assets over its estimated useful life.

Depreciation:

Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life.

Straight-line method:

Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset.

$\text{Depreciation cost = }\frac{\text{Cost of the asset-Salvage value}}{\text{Estimated useful life of the asset}}$

The amount of depreciation and amortization which the Company P reported in the fiscal year ended February 2, 2014.

2.

To determine

To Identify: The depreciation method used by Company P for financial reporting purposes.

To determine

To Identify: The service lives of the depreciable assets.