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Published byDayna Ford Modified over 9 years ago
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Chapter 7 Summary
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Tangible Land Land Improvements Buildings Equipment Vehicles Natural Resources Actual Ownership Rights to Mine Intangibles Patents Copy Rights Trade Marks
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All Costs Associated with Purchase of Asset ◦ Costs needed to use Asset for Intended Purpose
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Lump-Sum (Basket) Purchase Determine Market (Appraised) Value of each Asset separately Determine relative % of each assets Market Value to Total Market value Multiply market value % (weight) by Lump-Sum Cost
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Assets: ◦ Economic Resources that provide a future Benefit ◦ Benefit provided by Long-Term Assets Revenue Matching Principle ◦ Record any costs associated with Revenue Earned in the Period ◦ Consumption of Assets are a Cost, so we must Expense
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Depreciation Tangible Asset Depletion Natural Resource Amortization Intangible
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(Cost – Residual Value) / Useful Life Straight Line (Cost – Residual Value) / Total Units Cost per Unit x Units Produced Units of Production 2 x SL Rate = 2 x (1/Useful Life) Book Value x 2xSL rate Double Declining Balance
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Deprecation Expense xxxx Accumulated Depreciation xxxxxx Accumulated Depreciation is a ◦ Contra Asset Asset – Accumulated Depreciation = ◦ Book Value of the Asset
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