Depreciation A.Shows the amount of value an asset loses over time B.Is used to describe the decline in the value of fixed assets C.Can not be used for.

Slides:

Advertisements

Similar presentations

Partial Year Depreciation, Disposals, and Impairment Chapter 8 McGraw-Hill/Irwin © 2009 The McGraw-Hill Companies, Inc.

Advertisements

Depreciation, Impairments, and Depletion

BSAD 221 Introductory Financial Accounting Donna Gunn, CA.

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 9 Reporting and Interpreting Long-Lived Tangible.

ACCT 201 ACCT 201 ACCT 201 Reporting and Analyzing Long-Term Assets UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 8.

Long Lived Assets Types Cost determination Balance sheet presentation Disposal.

Reporting and Interpreting Property, Plant and Equipment; Natural Resources; and Intangibles Chapter 8 McGraw-Hill/Irwin © 2009 The McGraw-Hill Companies,

© 2004 The McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Chapter 11 Operational Assets: Utilization and Impairment.

Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 9 Reporting and Interpreting Long-Lived Tangible and.

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Operational Assets: Utilization and Impairment 11 Insert Book Cover Picture.

EQUIPMENT TANGIBLE ITEMS USED IN DAY TO DAY OPERATIONS THAT ARE EXPECTED TO LAST MORE THAN ONE YEAR.

CHAPTER 11 Depreciation, Impairments, and Depletion ……..…………………………………………………………... “allocating the cost of tangible assets to those periods expected to.

Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Slide 11-1 Chapter Eleven Operational Assets: Utilization and.

© The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Slide 9-1 PLANT AND INTANGIBLE ASSETS Chapter 9.

© The McGraw-Hill Companies, Inc., 2008 McGraw-Hill/Irwin 9-1 PLANT AND INTANGIBLE ASSETS Chapter 9.

 What is it?  First let’s remember our definition for an expense  Something that we spend money on to make money  Based on this definition shouldn’t.

McGraw-Hill /Irwin© 2009 The McGraw-Hill Companies, Inc. OPERATIONAL ASSETS: UTILIZATION AND IMPAIRMENT Chapter 11.

ACTG 3110 Chapter 11 – Depreciation, Impairments, and Depletion.

Chapter 10-1 PLANT ASSETS, NATURAL RESOURCES, AND INTANGIBLE ASSETS Accounting Principles, Eighth Edition CHAPTER 10.

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 9-1 Chapter Nine: Plant and Intangible Assets.

© The McGraw-Hill Companies, Inc., 2008 McGraw-Hill/Irwin PLANT AND INTANGIBLE ASSETS Chapter 9.

McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 4 International Financial Reporting Standards (IFRSs)

Reporting and Interpreting Property, Plant and Equipment; Natural Resources; and Intangibles Chapter 8 McGraw-Hill/Irwin © 2009 The McGraw-Hill Companies,

Reporting and Interpreting Property, Plant and Equipment; Natural Resources; and Intangibles Chapter 8 McGraw-Hill/Irwin © 2009 The McGraw-Hill Companies,

Chang, O.H.1 ACCT373 Intermediate Accounting II Chapter 11 Otto Chang Professor of Accounting.

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 9 Reporting and Interpreting Long-Lived Tangible and.

Chapter 9: Reporting and Interpreting Long-Lived Tangible and Intangible Assets Learning Objective 1 Define, classify, and explain the nature of long-lived.

1 © Copyright 2007 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star Logo, and South-Western are trademarks used herein under.

© The McGraw-Hill Companies, Inc., 2003 McGraw-Hill/Irwin Slide 9-1 PLANT AND INTANGIBLE ASSETS Chapter 9.

Depreciation Boeing Financial Statements – p. 50.

Copyright © 2007 Prentice-Hall. All rights reserved 1 Long-Term Assets: Plant Assets and Intangibles Chapter 9 Part 2.

9 Fixed Assets and Intangible Assets Student Version.

Depreciation Chapter 22 Accounting II.

© The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 9-1 PLANT AND INTANGIBLE ASSETS Chapter 9.

© The McGraw-Hill Companies, Inc., 2002 Slide 11-1 McGraw-Hill/Irwin 11 Plant Assets, Natural Resources, and Intangibles.

1 Module 6, Part 3: PPE (Property, Plant and Equipment) 1. Costs to Capitalize 2. Depreciation 3. Asset Sale or Impairment 4. Disclosure 5. Ratios.

© The McGraw-Hill Companies, Inc., 2003 McGraw-Hill/Irwin Slide Reporting and Analyzing Long-Term Assets.

IAS 39 vs FAS 159 versus. Must meet criteria so that financial reporting is improved by fair value measurement Precludes similar items as listed in FAS159.

Depreciation of Assets. Depreciation – The systematic allocation of the cost of an asset over its useful life is called depreciation. For example, the.

1 POINT 2 POINTS 3 POINTS 4 POINTS 5 POINTS Choc. Creme 1 POINT 4 POINTS 3 POINTS 2 POINTS2 POINTS 3 POINTS 2 POINTS 5 POINTS 2 POINTS 3 POINTS 4.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 18-4 Disposing of Plant Assets.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 18-4 Disposing of Plant Assets.

6-1 CHAPTER 6 Accounting for and Presentation of Property, Plant, and Equipment, and Other Noncurrent Assets McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies,

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 18-4 Disposing of Plant Assets.

Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A.,

1 POINT 2 POINTS 3 POINTS 4 POINTS 5 POINTS Choc. Creme 1 POINT 4 POINTS 3 POINTS 2 POINTS2 POINTS 3 POINTS 2 POINTS 5 POINTS 2 POINTS 3 POINTS 4.

1 CHAPTER 8 Long-Term Producing Assets and Investments in Equity Securities.

Property, Plant, and Equipment and Intangible Assets: Utilization and Impairment Chapter 11.

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Plant and Intangible Assets Chapter 9.

Chapter 16 Recording and Evaluating Capital Resource Process Activities: Investing McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc.

FINANCIAL ACCOUNTING A USER PERSPECTIVE

Fixed Assets and Intangible Assets

Fixed Assets Fixed assets are those assets: that have a long life,

LESSON 18-4 Disposing of Plant Assets

© 2014 Cengage Learning. All Rights Reserved.

International Financial Reporting Standards (IFRSs)

Accounting for Long-lived and intangible assets

OPERATIONAL ASSETS: UTILIZATION AND IMPAIRMENT

Fundamentals of Intermediate Accounting Weygandt, Kieso and Warfield

Adjustments to financial statements 1

Plant and Intangible Assets

HIGHLIGHTS OF CHAPTER 11: Operational Assets: Utilization & Impairment

Recording and Evaluating Capital Resource Activities: Investing

Engineering Economy Lecture 11 Depreciation.

BUSINESS HIGH SCHOOL-ACCOUNTING II

PLANT AND INTANGIBLE ASSETS

SALE OF A PLANT ASSET FOR BOOK VALUE

Intermediate Accounting II Chapter 11

Operational Assets: Utilization and Impairment

Long-Term Assets: Plant Assets and Intangibles

Presentation transcript:

Depreciation A.Shows the amount of value an asset loses over time B.Is used to describe the decline in the value of fixed assets C.Can not be used for intangible assets D.Means the allocation of the cost of an asset over its useful life

E 11-4 using straight line, depreciation expense for year two would be A.$30,000 B.$31,500 C.$31,800 D.$31,875

E 11-4 using units of output, depreciation expense for year two would be A.$30,000 B.$31,500 C.$31,800 D.$31,875

E 11-4 using hours, depreciation expense for year two would be A.$30,000 B.$31,500 C.$31,800 D.$31,875

Indications of Asset Impairment (FAS 144) A.Decrease in market value of equivalent assets B.Decrease in expected future cash flows from asset Legal/regulatory problems Increased operating costs Decline in demand for output (or decline in price of output) C.Significant increase in construction costs D.Decrease in stock price (after merger)

Evaluation of Asset Impairment Compare expected UNDISCOUNTED net cash flows (NCF) from asset with book value (BV): A.NCF > BV = No impairment B.NCF < BV = Impairment

Evaluation of Asset Impairment II If impairment: Compare DISCOUNTED present value of expected net cash flows with market value. A.PV of NCF > MV = write down to PV, continue to use/depreciate B.PV of NCF < MV = write down to MV – evaluate for disposal

Evaluation of Asset Impairment II PV of NCF < MV = write down to MV – evaluate for disposal: Asset is would be worth more if sold. If decision is made to sell: Stop depreciation, report asset at net realizable value (MV) in separate section of Balance sheet: “Assets to be disposed off” Note: This is a business, NOT and accounting decision!

Recovery of Asset Value after Impairment 1.If asset is being used recovery of value is ignored. No write –up permitted, once asset has been written down. 2.If asset is being held for sale, shown at net realizable value (NRV) asset MAY be written up, up to original carrying value before impairment was recognized.

Problem What is the amount of asset impairment?

Problem 11-9: The entry to write down the asset includes A.A debit to equipment for $1.6 mil B.A credit to equipment for $1.6 mil C.A debit to accumulated depreciation for $1.6 mil D.A credit to accumulated depreciation for $1.6 mil

Problem 11-9 What is the new depreciation expense?

Oil and Gas Exploration FAS 19 – suspended No definitive standard Political issue – may become interesting again given current gasoline price situation

Answers 1.(slide 2) A 2.(Slide 3) D 3. (Slide 4) C 4.(Slide 10) $1,600,000 5.(slide 11) D 6.(slide 12) $1,100,000