1. Accounting 3 Chapter 21 Section 3

2. Preparing Plant Asset Records A separate record is kept for each plant asset. This is called a Plant Asset Record. A separate record is kept for each plant asset. This is called a Plant Asset Record. Section 1 is prepared when the asset is purchased. It includes, the description, account numbers, serial numbers, cost, etc. Section 1 is prepared when the asset is purchased. It includes, the description, account numbers, serial numbers, cost, etc. Section 2 provides space for recording the disposal information of the asset when it is taken out of use. Section 2 provides space for recording the disposal information of the asset when it is taken out of use. Section 3 provides space for recording annual depreciation expense and the changing book value each year it is used. Section 3 provides space for recording annual depreciation expense and the changing book value each year it is used.

3. Plant Asset Record Example Plant Asset Record No : ________ General Ledger Account No: __________ Description: ________________________ General Ledger Account: ___________________ Date Bought: _____________ Serial Number: __________________ Original Cost: _____________ Est. Useful Life: __________ Est. Salvage Value: _________ Depreciation Method: ___________ Disposed of: Discarded _________ Sold __________ Traded __________ Date: _________________ Disposal Amount: ____________________ YearAnnual Depreciation Expense Accumulated DepreciationEnding Book Value

4. Journalizing Annual Depreciation Expense At the end of the fiscal year, after each plant assets depreciation has been figured and recorded, the total depreciation expense for all plant assets in the same plant asset account is calculated. At the end of the fiscal year, after each plant assets depreciation has been figured and recorded, the total depreciation expense for all plant assets in the same plant asset account is calculated. In example, the depreciation expense of all plant assets in the store equipment account would need to be calculated. In example, the depreciation expense of all plant assets in the store equipment account would need to be calculated.

5. Journalizing Annual Depreciation Expense To journalize the depreciation expense of a plant asset account, an adjusting entry must be made using two accounts in the General Journal. To journalize the depreciation expense of a plant asset account, an adjusting entry must be made using two accounts in the General Journal. First is Depreciation Expense- (type of plant asset). This account has a normal debit balance and increases with a debit. First is Depreciation Expense- (type of plant asset). This account has a normal debit balance and increases with a debit. Second is Accumulated Depreciation- (type of plant asset). This account is used to keep track of all accumulated depreciation for each type of plant asset. It has a normal credit balance (because it is a contra asset account) and increases with a credit. Second is Accumulated Depreciation- (type of plant asset). This account is used to keep track of all accumulated depreciation for each type of plant asset. It has a normal credit balance (because it is a contra asset account) and increases with a credit.

6. Winning Edge determined that total depreciation expense for store equipment is $8,750.00. After the adjustment has been planned on the worksheet… General Journal Page ___ DateAccount Title Post Ref. Doc. No. DebitCredit 15 31Depreciation Expense-Store Equip. 8 7 5 0 00 Acc. Depr.-Store Equipment 8 7 5 0 00 Posting for this transaction is done in the same way any other posting for General Debit and Credit would be done.

7. Work Together p. 556 On next four slides Plant Asset Record No : ________ General Ledger Account No: __________ Description: ________________________ General Ledger Account: ___________________ Date Bought: _____________ Serial Number: __________________ Original Cost: _____________ Est. Useful Life: __________ Est. Salvage Value: _________ Depreciation Method: ___________ Disposed of: Discarded _________ Sold __________ Traded __________ Date: _________________ Disposal Amount: ____________________ YearAnnual Depreciation Expense Accumulated DepreciationEnding Book Value 1341215 TelevisionStore Equipment January 4, 200115SG152$700.00 3 years$100.00Straight-Line 2001 2002 2003 $200.00 $400.00 $600.00 $500.00 $300.00 $100.00

8. Plant Asset Record No : ________ General Ledger Account No: __________ Description: ________________________ General Ledger Account: ___________________ Date Bought: _____________ Serial Number: __________________ Original Cost: _____________ Est. Useful Life: __________ Est. Salvage Value: _________ Depreciation Method: ___________ Disposed of: Discarded _________ Sold __________ Traded __________ Date: _________________ Disposal Amount: ____________________ YearAnnual Depreciation Expense Accumulated DepreciationEnding Book Value 135 1205 Office DeskOffice Equipment May 27, 2001GE572N$920.00 6 years$200.00Straight Line 2001 2002 2003 $70.00 $120.00 $70.00 $190.00 $310.00 $850.00 $730.00 $610.00

9. Account Title Trial BalanceAdjustments Debit Credit Worksheet Gabriel, Inc. For Year Ended, December 31, 2003 Office Equipment 24 5 8 7 00 Accumulated Depreciation-Office Equipment 8 4 5 4 00 Depreciation Expense-Office Equipment (f) 3 1 2 0 00

10. General Journal Page ___ DateAccount Title Post Ref. Doc. No. DebitCredit 18 31 Adjusting Entries DecDepreciation Expense-Office Equip6120 3 1 2 0 00 Acc. Depreciation-Office Equip1210 3 1 2 0 00

11. Account Acct No. DateItem Post Ref DebitCredit BALANCE DEBITCREDIT Account Acct No. DateItem Post Ref DebitCredit BALANCE DEBITCREDIT General Ledger Accumulated Depreciation-Office Equipment 1210 Jan 1 Balance 8 4 5 4 00 Dec 31 G18 3 1 2 0 00 11 5 7 4 00 Depreciation Expense-Office Equipment6120 Dec 31 G18 3 1 2 0 00 3 1 2 0 00

12. Assignment Do Application 21-3 and 21-4 by hand. Do Application 21-3 and 21-4 by hand. Turn it into Mrs. Middleton. Turn it into Mrs. Middleton. Move on to Section 21-4. Move on to Section 21-4.