1. © 2014 Cengage Learning. All Rights Reserved. Learning Objectives © 2014 Cengage Learning. All Rights Reserved. LO1Record the buying of a plant asset. LO2 Analyze the cost of individual assets bought as a bundle. LO3 Calculate and record the payment of property tax.

2. © 2014 Cengage Learning. All Rights Reserved. Plant Assets ●Accounting data can be used to predict the efficiency of an investment. ●The ratio of the money earned on an investment relative to the amount of the investment is called return on investment, or ROI. ●The more efficient the investment, the higher its ROI. ●These predictions will help company managers decide which assets to buy. SLIDE 2 Lesson 19-1 LO1

3. © 2014 Cengage Learning. All Rights Reserved. Recording the Buying of a Plant Asset SLIDE 3 LO1 January 3, 20X1. Paid cash for a shelving unit, $8,500.00. Check No. 612. 1 1 Account Title 8,500.00 Store Equipment Cash 8,500.00 2 2 Cost of the Plant Asset 3 3 Cash Paid Lesson 19-1

4. © 2014 Cengage Learning. All Rights Reserved. Recording the Buying of a Group of Assets SLIDE 4 Estimated Value of Asset 1 + Estimated Value of Asset 2 = Total Estimated Value of All Assets Bought Calculate the total estimated value of all the assets bought: $7,500.00+$22,500.00=$30,000.00 LO2 Lesson 19-1

5. © 2014 Cengage Learning. All Rights Reserved. Recording the Buying of a Group of Assets SLIDE 5 Estimated Value of Asset 1 ÷ Total Estimated Value of All Assets Bought = Percentage of Total Estimated Value Calculate the cost assigned to the copy machine (Asset 1): Total Purchase Price × Percentage of Total Estimated Value = Cost Assigned to Asset 1 $7,500.00÷$30,000.00=25% $27,000.00×25%=$6,750.00 LO2 Lesson 19-1

6. © 2014 Cengage Learning. All Rights Reserved. Estimated Value of Asset 2÷ Total Estimated Value of All Assets Bought= Percentage of Total Estimated Value Recording the Buying of a Group of Assets SLIDE 6 Calculate the cost assigned to the display case (Asset 2): Total Purchase Price÷ Percentage of Total Estimated Value= Cost Assigned to Asset 1 $22,500.00÷$30,000.00=75% $27,000.00÷75%=$20,250.00 LO2 Lesson 19-1

7. © 2014 Cengage Learning. All Rights Reserved. Recording the Buying of a Group of Assets SLIDE 7 LO2 March 5, 20X1. Dufore Company bought a copy machine and a display case for $27,000.00. Check No. 234. 3 3 Account Title for Second Plant Asset 1 1 Account Title for First Plant Asset 6,750.00 Office Equipment 20,250.00 Store Equipment Cash 27,000.00 2 2 Amount Assigned to Asset 1 4 4 Amount Assigned to Asset 2 5 5 Total Cash Paid Lesson 19-1

8. © 2014 Cengage Learning. All Rights Reserved. Calculating and Paying Property Tax ●Land and anything attached to the land is called real property. ●Real property is sometimes referred to as real estate. ●All property not classified as real property is called personal property. ●The value of an asset determined by tax authorities for the purpose of calculating taxes is called the assessed value. ●Assessed value is usually based on the judgment of officials referred to as assessors. SLIDE 8 Lesson 19-1

9. © 2014 Cengage Learning. All Rights Reserved. Assessed Value ×Tax Rate= Annual Property Tax $80,000.00×1.30%=$1,040.00 Calculating and Paying Property Tax SLIDE 9 1,040.00 Property Tax Expense Cash 1,040.00 1 1 Account Title 2 2 Amount of Tax 3 3 Cash Paid LO3 Lesson 19-1

10. © 2014 Cengage Learning. All Rights Reserved. Lesson 19-1 Audit Your Understanding 1.Which accounts are affected, and how, when cash is paid for office equipment? SLIDE 10 ANSWER Office Equipment is debited; Cash is credited. Lesson 19-1

11. © 2014 Cengage Learning. All Rights Reserved. Lesson 19-1 Audit Your Understanding 2.Why must a cost be allocated to each asset bought in a group? SLIDE 11 ANSWER So that each plant asset can be depreciated individually Lesson 19-1

12. © 2014 Cengage Learning. All Rights Reserved. Lesson 19-1 Audit Your Understanding 3.What items are included in real property? SLIDE 12 ANSWER Land and anything attached to the land Lesson 19-1