Documenti di Didattica
Documenti di Professioni
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PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W. Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
McGraw-Hill/Irwin
10 - 2
C1
PLANT ASSETS
Tangible in Nature
10 - 3
C1
PLANT ASSETS
10 - 4
C1
COST DETERMINATION
Purchase
price
Acquisition
Cost
All expenditures
needed to
prepare the
asset for its
intended use
10 - 5
C1
LAND
Title insurance premiums
Purchase
price
Delinquent
taxes
Real estate
commissions
Surveying
fees
Title search and transfer fees
10 - 6
C1
LAND IMPROVEMENTS
Parking lots, driveways, fences, walks, shrubs,
and lighting systems.
Depreciate
over useful life of
improvements.
10 - 7
C1
BUILDINGS
Cost of purchase or
construction
Title fees
Brokerage
fees
Attorney fees
Taxes
10 - 8
C1
Taxes
Transportation
charges
Installing,
assembling, and
testing
Insurance while
in transit
10 - 9
P1
10 - 10
P1
DEPRECIATION
Depreciation is the process of allocating the
cost of a plant asset to expense in the
accounting periods benefiting from its use.
Balance Sheet
Acquisition
Cost
(Unused)
Income Statement
Cost
Allocation
Expense
(Used)
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P1
1. Cost
2. Salvage Value
3. Useful Life
10 - 12
P1
DEPRECIATION METHODS
1.
Straight-line
2.
Units-of-production
3.
Declining-balance
Asset we will depreciate in future screens
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P1
STRAIGHT-LINE METHOD
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P1
STRAIGHT-LINE METHOD
As of December 31
$ 10,000
3,600
6,400
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P1
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P1
UNITS-OF-PRODUCTION METHOD
Step 1:
Depreciation
Per Unit
Step 2:
Depreciation
Expense
Depreciation
Per Unit
Number of Units
Produced
in the Period
10 - 17
P1
UNITS-OF-PRODUCTION METHOD
Assume that 7,000 units were inspected
during 2011. Depreciation would be
calculated as follows:
Step 1:
Depreciation = Cost - Salvage Value
Per Unit
Total Units of Production
$9,000
36,000
= $0.25/unit
Step 2:
Number of Units
Depreciation
Depreciation
= $0.25 7,000 = $1,750
Produced
=
Expense
Per Unit
in the Period
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P1
UNITS-OF-PRODUCTION
DEPRECIATION SCHEDULE
10 - 19
P1
DOUBLE-DECLINING-BALANCE METHOD
10 - 20
P1
DOUBLE-DECLINING-BALANCE METHOD
10 - 21
P1
StraightLine
$ 1,800
1,800
1,800
1,800
1,800
$ 9,000
Units of
Production
$ 1,750
2,000
2,250
1,750
1,250
$ 9,000
DoubleDecliningBalance
$ 4,000
2,400
1,440
864
296
$ 9,000
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$-
2011
Straight-Line
2012
2013
Units-of-Production
2014
2015
Double-Declining-Balance
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P1
10 - 23
C2
PARTIAL-YEAR DEPRECIATION
When a plant asset is acquired during the year,
depreciation is calculated for the fraction of the
year the asset is owned.
Cost
Salvage value
Depreciable cost
Useful life
Accounting periods
Units inspected
$
$
10,000
1,000
9,000
5 years
36,000 units
10 - 24
C2
Predicted
useful life
Depreciation
is an estimate
Over the life of an asset, new information may
come to light that indicates the original estimates
were inaccurate.
10 - 25
C2
10 - 26
C2
REPORTING DEPRECIATION
Dale Jarrett Racing Adventure
Office furniture and equipment
Shop and track equipment
Race vehicles and other
Property and equipment, gross
$ 54,593
202,973
975,084
1,232,650
628,355
$ 604,295
10 - 27
C3
ADDITIONAL EXPENDITURES
Treatment
Capital
Expenditure
Revenue
Expenditure
Current
Taxes
Higher
Lower
10 - 28
C3
1.
2.
Revenue
3.
1.
Identifying Characteristics
Maintains normal operating condition.
Does not increase productivity.
Does not extend life beyond original
estimate.
Major overhauls or partial
replacements.
Capital
2. Extends life beyond original estimate.
10 - 29
P2
Recording a
gain (credit)
or loss (debit).
Removing the
asset cost (credit).
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P2
Recording a
gain (credit)
or loss (debit).
Removing the
asset cost (credit).
10 - 31
P2
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P2
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P2
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P2
Step 2: Record sale of asset at a loss (Book value $3,000 - $2,500 cash received).
10 - 35
P3
NATURAL RESOURCES
Total cost,
including
exploration and
development,
is charged to
depletion expense
over periods
benefited.
Extracted from
the natural
environment
and reported
at cost less
accumulated
depletion.
10 - 36
P3
10 - 37
P3
10 - 38
P3
Specialized
10 - 39
P4
INTANGIBLE ASSETS
Often provide
exclusive rights
or privileges.
Noncurrent assets
without physical
substance.
Intangible
Assets
Useful life is
often difficult
to determine.
Usually acquired
for operational
use.
10 - 40
P4
o
o
o
o
o
o
o
o
Patents
Copyrights
Leaseholds
Leasehold Improvements
Franchises and Licenses
Goodwill
Trademarks and Trade Names
Other Intangibles
10 - 41
GLOBAL VIEW
There is one area where notable differences exist, and that is in
accounting for changes in the value of plant assets (between the
time they are acquired and disposed of). Namely, how does IFRS
and U.S. GAAP treat decreases and increases in the value of plant
assets subsequent to acquisition?
Decreases in the Value of Plant Assets
Both U.S. GAAP and IFRS require
that an impairment in value be
recognized.
Increases in the Value of Plant Assets
U.S. GAAP prohibits recording
increase in value of plant assets. IFRS
permits upward asset revaluation.
10 - 42
A1
Boston Beer
$ in millions
Net sales
2008
4,774
2007
6,191
2006
5,845
2005
5,507
11,934
0.40
12,528
0.49
11,701
0.50
8,228
0.67
Net sales
$ 398
$ 342
$ 285
$ 238
208
1.91
176
1.94
137
2.09
113
2.10
10 - 43
P5
10 - 44
P5
10 - 45
P5
Lets assume the same facts as on the previous screen except that the
market value of the new equipment received is $52,000 and the transaction
lacks commercial substance.
10 - 46
END OF CHAPTER 10