Exchange or Trade in of a Plant Asset Trade in for a similar asset. If market value of the old equipment is less than book value, a loss must be recognized. If the market value is greater than book value do not recognize a gain. The new equipment received in a trade is reduced by the amount of the gain. Natural Resources Consumption of the natural resource is recognized as depletion expense.
Depletion is used to allocate the cost of the asset to the period in which it is consumed.
Multiple the unit value by the amount of resource mined or harvested. Intangible Assets Patents-Amortize the cost of a patent over a 20 year period or the expected life. Copyrights-granted for life of the artist plus 50 years. Trademarks-amortize over the useful life.