What is Advanced Battery Technologies Depreciation, Depletion and Amortization?
Advanced Battery Technologies's depreciation, depletion and amortization for the
six
months ended in Dec. 2010 was $4.12 Mil. Its depreciation, depletion and amortization for the trailing twelve months (TTM) ended in Dec. 2010 was $4.12 Mil.
Advanced Battery Technologies Depreciation, Depletion and Amortization Historical Data
The historical data trend for Advanced Battery Technologies's Depreciation, Depletion and Amortization can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
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Advanced Battery Technologies Depreciation, Depletion and Amortization Chart
Advanced Battery Technologies Depreciation, Depletion and Amortization Calculation
Depreciation is a present expense that accounts for the past cost of an asset that is now providing benefits.
Depletion and amortization are synonyms for depreciation.
Generally:
The term depreciation is used when discussing man made tangible assets
The term depletion is used when discussing natural tangible assets
The term amortization is used when discussing intangible assets
For stock reported annually, GuruFocus uses latest annual data as the TTM data. Depreciation, Depletion and Amortization for the trailing twelve months (TTM) ended in Dec. 2010 was $4.12 Mil.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Advanced Battery Technologies (OTCPK:ABAT) Depreciation, Depletion and Amortization Explanation
One of the key tenets of Generally Accepted Accounting Principles (GAAP) is the matching principle. The matching principle states that companies should report associated costs and benefits at the same time.
For example:
If a company buys a $300 million cruise ship in 1982 and then sells tickets to passengers for the next 30 years, the company should not report a $300 million expense in 1982 and then ticket sales for 1982 through 2012. Instead, the company should spread the purchase price of the ship (the cost) over the same time period it sells tickets (the benefit).
To create income statements that meet the matching principle, accountants use an expense called depreciation.
So, instead of reporting a $300 million purchase expense in 1982, the company might:
Report a $30 million depreciation expense in 1982, 1983, 1984...and every year after that for the 30 years the company expects to sell tickets to passengers on this cruise ship.
To calculate depreciation, a company must make estimates and choices such as:
The cost of the asset
The useful life of the asset
The salvage value of the asset at the end of its useful life
And a way of spreading the cost of the asset to match the time when the asset provides benefits
The range of different ways of spreading the cost under GAAP accounting is too long to list. However, public companies in the United States explain their depreciation choices to shareholders in a note to their financial statements. It is critical that investors read this note. Investors can find this note in the company's 10-K.
Past depreciation expenses accumulate on the balance sheet. Most public companies choose not to show this contra asset account on the balance sheet they present to shareholders. Instead, they simply show a single item. This single asset item may be marked Net. Such as Property, Plant, and Equipment - Net. It is actually the asset account netted against the contra asset account.
A contra asset account is an account that offsets an asset account. So, for example a company might have:
Property, Plant, and Equipment - Gross: $150 million
Accumulated Depreciation: $120 million
Property, Plant, and Equipment - Net: $30 million
In this case, the only item likely to be shown on the balance sheet is Property, Plant, and Equipment - Net. This is the cost of the company's property, plant, and equipment (asset account) minus the accumulated depreciation (the contra asset account). It means the company's assets cost $150 million, the company has reported $120 million in depreciation expense over the years, and the company is now reporting the assets have a book value of $30 million.
It is possible for a company to have fully depreciated assets on its balance sheet. This means the company's estimate of the useful life of the asset was shorter than the asset's actual useful life. As a result, the asset - although it is still being used - is carried on the balance sheet at its salvage value.
This is a reminder that depreciation involves estimates and choices. It is not an infallible process.
Companies do not have cash layout for depreciation. Therefore, depreciation is added back in the cash flow statement.
Although depreciation is not a cash cost, it is a real business cost because the company has to pay for the fixed assets when it purchases them. Both Warren Buffett and Charlie Munger hate the idea of EDITDA because depreciation is not included as an expense. Warren Buffett even jokingly said We prefer earnings before everything when criticizing the abuse of EDITDA.
Be Aware
Depreciation estimates make the calculation of net income susceptible to management's accounting choices. These choices can be either overly aggressive or overly conservative.
Advanced Battery Technologies Depreciation, Depletion and Amortization Related Terms
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Advanced Battery Technologies (Advanced Battery Technologies) Business Description
Advanced Battery Technologies Inc was incorporated in the State of Delaware on January 16, 1984. It is a holding company, which is engaged in design, manufacture and distribution of rechargeable polymer lithium-ion batteries and electric vehicles through its wholly owned subsidiaries, Cashtech, ZQPT, Wuxi ZQ and the VIE, HLJ ZQPT. ZQ Power-Tech designs, manufactures and markets rechargeable polymer lithium-ion batteries. PLI batteries produce a relatively high average of 3.8 volts per cell, which makes them attractive in terms of both weight and volume. Additionally, they can be manufactured in very thin configurations and with large footprints. PLI cells can be configured in almost any prismatic shape, and can be made thinner than 0.0195 inches to fill virtually any shape efficiently. This combination of power and versatility makes rechargeable PLI batteries particularly attractive for use in consumer products such as portable computers, personal digital assistants and cellular telephones. ZQ Power-Techs batteries combine high-energy chemistry with state-of-the-art polymer technology. Every battery component is solid, which means that there are no liquids that need to be contained by heavy cell housings. The result is a safe, thin, lightweight rechargeable battery with an operating temperature range. Similar to lithium-ion prismatic rechargeable cells, the ZQ Power-Tech polymer cells do not exhibit a memory problem. This means that they can be recharged at any state of charge, without first having to be completely discharged. At the present time, ZQ Power-Tech produces only one finished product. This is a cordless miners lamp equipped with a rechargeable PLI battery. The Companys operating subsidiaries, ZQ Power-Tech and Wuxi ZQ, are subject to numerous Chinese provincial and local laws and regulations relating to the protection of the environment.
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