Recording and Evaluating Capital Resource Activities: Investing

Slides:



Advertisements
Similar presentations
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 16 Recording and Evaluating Capital Resource Activities:
Advertisements

Financial and Managerial Accounting Wild, Shaw, and Chiappetta Fourth Edition Wild, Shaw, and Chiappetta Fourth Edition McGraw-Hill/Irwin Copyright © 2011.
Chapter 9: CAPITAL ASSETS Final Exam will be at 8:30am Jan 26 this room CHAPTER 9.
10.3 Disposals Property, Plant, and Equipment. 3 Methods of PPE Disposal Retirement –Equipment is scrapped or discarded Sale –Equipment is sold to another.
Chapter 9: CAPITAL ASSETS Quiz for chapter 9 will be Thurs or Friday of next week. (May 22 or May 23) CHAPTER 9.
ACCT 201 ACCT 201 ACCT 201 Reporting and Analyzing Long-Term Assets UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 8.
Non-Current Assets.
Long Lived Assets Types Cost determination Balance sheet presentation Disposal.
8-1 Acquiring Plant Assets  Long-term operational assets  Assets that last for more than one accounting period  Used to help a business generate revenue.
Chapter 10  Measures of Operating Capacity. Chapter 10Mugan-Akman
1 Chapter 8 Operating Assets: Property, Plant, and Equipment, Natural Resources, and Intangibles Financial Accounting, Alternate 4e by Porter and Norton.
1 Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Chapter 8 Operating Assets: Property, Plant, and Equipment, Natural Resources,
© 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater Accounting for Property, Plant, Equipment & Intangible.
© 2004 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 9e by Slater Accounting for Property, Plant Equipment, and.
© The McGraw-Hill Companies, Inc., 2008 McGraw-Hill/Irwin 9-1 PLANT AND INTANGIBLE ASSETS Chapter 9.
Accounting for Plant Assets and Depreciation
Valuation and Reporting of Fixed and Intangible Assets Chapter 7.
Chapter 8, Slide #1 Using Financial Accounting Information: The Alternative to Debits and Credits Fifth Edition Gary A. Porter and Curtis L. Norton Copyright.
Ch.8 Operating Assets: Plant Assets, Natural Resources, and Intangible Assets.
Investments in Property, Plant, and Equipment and in Intangible Assets Investments in Property, Plant, and Equipment and in Intangible Assets C H A P T.
PLANT ASSETS, NATURAL RESOURCES, AND INTANGIBLE ASSETS
Chapter 41 Cash, Short-term Investments and Accounts Receivable Chapter 4.
1 Chapter 10 Long-term Assets: Property, Plant, and Equipment, Natural Resources, and Intangibles Adapted from Financial Accounting 4e by Porter and Norton.
Financial and Managerial Accounting John J. Wild Third Edition John J. Wild Third Edition McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies,
©CourseCollege.com 1 15 Plant Assets Plant assets are also know as Property, plant & equipment Learning Objectives 1.Account for the acquisition cost of.
Property, Plant, and Equipment
COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 8-3 Disposing of Plant Assets.
COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.
Copyright © 2007 Prentice-Hall. All rights reserved 1 Long-Term Assets: Plant Assets and Intangibles Chapter 9 Part 2.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 8-3 Disposing of Plant Assets Disposing of plant assets. Gain/loss on plant assets.
CHAPTER 18 Buying Plant Assets and Paying Property Tax.
Depreciation Chapter 22 Accounting II.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 8-3 Disposing of Plant Assets Disposing of plant assets. Gain/loss on plant assets.
Financial Accounting John J. Wild Sixth Edition John J. Wild Sixth Edition McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights.
Chapter 10-1 Chapter 10 Plant Assets, Natural Resources, and Intangible Assets Accounting Principles, Ninth Edition.
16-1 What if the Company Doesn’t Purchase (or sell) the Asset at the Beginning (or end) of the Year? Units-of-production  Multiple the depreciation rate.
Property, Plant, and Equipment, and Intangibles
Plant Assets, Natural Resources, and Intangible Assets.
ACTG 2110 Chapter 10 – Fixed Assets and Intangible Assets.
Learning Objectives After studying this chapter, you should be able to: [1] Describe how the historical cost principle applies to plant assets.
LESSON 8-3 Disposing of Plant Assets
Chapter 6 Property, Plant & Equipment ; Intangible Assets.
1 Chapter 6: Reporting & Analyzing Operating Assets Part 3: Property, Plant & Equipment.
10 Measures of Operating Capacity © 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for.
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 16 Recording and Evaluating Capital Resource Activities:
Financial Accounting Chapter 8. Property, Plant and Equipment and Intangibles.
Acquisition Cost of P,P&E  All costs necessary to acquire asset and prepare for intended use Purchase Price + Taxes LO 2 Examples: Purchase price Taxes.
COPYRIGHT © 2011 South-Western/Cengage Learning 8 PowerPoint Author: Catherine Lumbattis Operating Assets Property, Plant, and Equipment, and Intangibles.
Chapter 16 Recording and Evaluating Capital Resource Process Activities: Investing McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc.
Recording and Evaluating Capital Resource Activities: Investing
Property, Plant and Equipment (including natural resources)
Long-Term and Intangible Assets
Long-term Assets
Financial Accounting Chapter 8
Operating Assets: Property, Plant, and Equipment, and Intangibles
Fixed Assets and Intangible Assets
Acquisition Cost of P,P&E
Long-Term and Intangible Assets
10 Measures of Operating Capacity.
Fixed Assets and Depreciation
BUSINESS HIGH SCHOOL-ACCOUNTING II
Long-Term Assets: Plant Assets and Intangibles
Property, Plant, and Equipment, Natural Resources,
Financial Accounting Lesson 7: Fixed and Intangible Assets
Unit 13 Long-Term Assets.
Accounting for Plant Assets and Depreciation
DISCARDING A PLANT ASSET WITH NO BOOK VALUE
Investments: Property, Plant, and Equipment and Intangible Assets
Presentation transcript:

Recording and Evaluating Capital Resource Activities: Investing Chapter 16 Recording and Evaluating Capital Resource Activities: Investing

What is the Cost of Property, Plant, and Equipment? PPE is recorded as the total amount required to obtain and get the asset ready for its intended use Purchase price Costs incurred to obtain (freight, etc.) Cost incurred to setup (installation, etc.)

What are the Factors Affecting Depreciation Calculations? Cost Useful life Salvage value Depreciation method

How is Depreciation Expense Calculated Using the Different Methods? Straight-line (Cost – salvage value)/Useful life (time) = annual depreciation expense Units-of-production (Cost – salvage value)/Useful life (units) = depreciation rate Depreciation rate * annual usage = annual depreciation expense

Depreciation Expense Calculated Using the Different Methods Continued Double-declining balance 2 * straight-line rate = DDB rate DDB * carrying value = annual depreciation expense

What is the Company Doesn’t Purchase (or sell) the Asset at the Beginning (or end) of the Year? Units-of-production Multiple the depreciation rate by the actual usage Straight-line or double-declining balance Use the mid-year convention or count the time that the asset was in use

How Can a Company Dispose of an Asset Before its Useful Life is Over? Discard Sell Exchange Trade-in

What is the Process Involved in Asset Disposals? Record depreciation to date of disposal Remove the cost of the asset (CR) and the accumulated depreciation (DR) from the records Record the assets received (DR) if applicable Record the cash paid (CR) if applicable Record the loss incurred (DR) if applicable Record the gain (CR) if applicable unless the asset is exchanged for a similar asset, if so, reduce the amount recorded for the asset received by the gain

Trade-in Example We have a computer that originally cost $6,000 and has accumulated depreciation of $4,500. We will trade-in this computer for a new computer with a list price of $10,000. The computer company will give us a trade-in allowance of $2,000. Book value = $6,000 - $4,500 = $1,500. Cash payment required = $10,000 - $2,000 = $8,000

Trade-in Example Continued Computer received = $10,000 Less assets given up = $9,500 Gain = $500 (not recognized) Entry: Computer (new) 9,500 Accumulated depreciation 4,500 Computer (old) 6,000 Cash 8,000

What are Depletion and Amortization? The cost of a natural resource is allocated to expense Typically, units-of-production method used Amortization The cost of an intangible asset is allocated to expense Typically, straight-line method is used