中央财经大学会计专业英语教程Cha.ppt

Chapter3AccountingforAssets FeatureTopic ThecharacteristicsofProperty PlantandEquipment Tobeincludedinthiscategory anassetmusthave3characteristics 1 Theassetmustbeheldforuseandnotforinvestment 2 Theassetmusthaveanexpectedlifeofmorethanonyear 3 Theassetmustbetangibleinnature ChapterSkeleton P66 67 3 1PlantandEquipment Thetermplantandequipmentisusedtodescribelong livedassetsacquiredforuseintheoperationsofthebusinessandnotintendedforresaletocustomers Determiningthecostofplantandequipment Thecostofplantanequipmentincludesallexpendituresreasonableandnecessaryinacquiringanassetandplacingitinapositionandconditionforuseintheoperationofthebusiness OnlyreasonableandnecessaryexpendituresshouldbeincludedExample Land Whenlandispurchased variousincidentalcostsareincurred inadditiontothepurchaseprice Apportionmentofalump Sumpurchase Whenlandandbuildingsarepurchasedforalumpsum thepurchasepricemustbeapportionedbetweenlandandbuildings Illustration3 1 p68 LandImprovements Improvementstorealestatesuchasdriveways fences parkinglots andsprinklersystems havealimitedlifeandarethereforesubjecttodepreciation Buildings DepreciationAllocatingthecostofplantandequipmentovertheyearsofusage Tangibleplantassets withtheexceptionofland areofusetoacompanyforonlyalimitednumberofyears Depreciation asthetermisusedinaccounting istheallocationofcostofatangibleplantassettoexpenseintheperiodsinwhichservicesarereceivedfromtheasset ThejournalentrytorecorddepreciationexpenseconsistsofadebittoDepreciationexpenseandacredittoAccumulatedDepreciation Allocatingthecostofplantandequipmentovertheyearsofusage Depreciationisaprocessofcostallocation notaprocessofvaluation Therearetwomajorcausesofdepreciation physicaldeteriorationandobsolescence Methodsofcomputingdepreciation Straight LineMethod thesimplestandmostwidelyusedmethod 1 AnnualDeprecation CostorResidualValue YearsofUsefulLifeUnits of Outputmethod forcertainkindsofassets moreequitableallocationofthecostcanbeobtainedbydividingthecostbytheestimatedunitsofoutputratherthanbytheestimatedyearsofusefullife 1 Thismethodissuitableonlywhenthetotalunitsoftheassetoveritsentirelifecanbeestimatedwithreasonableaccuracy AcceleratedDepreciationmethods 1 Thetermacceleratedmeansrecognitionofrelativelylargeamountsofdepreciationintheearlyyearsofuseandreducedamountsinthelateryears Fixed Percentage of Declining BalanceMethod1 Themostwidelyusedformofaccelerateddepreciationisthefixed percentage of declining balancemethod 2 Depreciationexpense RemainingBookValue AcceleratedDepreciationRate 3 Illustration3 2 Sum of the Years DigitsMethod1 Thedepreciationrateisstatedasafraction whichgetssmallereachyear These shrinkingfractions determinethepercentageoftheasset sdepreciableamountchargedtodepreciationexpenseearyear 2 ExampleDepreciationforFractionalPeriods1 Roundthecalculationtothenearestwholemonth 2 Orhalf yearconvention istorecordsixmonths depreciationonallassetsacquiredduringtheyear DisposalofPlantandEquipment Whendepreciableassetsaredisposedofatanydateotherthantheendoftheyear anentryshouldbemadetorecorddepreciationfobthefractionoftheyearendingwiththedateofdisposal Asunitsofplantandequipmentwearoutorbecomeobsolete theymustbescrapped sold ortradedinonnewequipment EntryExample p73 GainsandLossesondisposalofplantandequipment DisposalataPriceabovethebookvalueDisposalataPricebelowthebookvalueDisposalatapriceequaltobookvalue CostofIntangibles Illustration3 3 CostofIntangibles AmortizationorImpairmentofintangibleassets Intangibleassetsareseparatedintothreecategoriestodeterminewhetherornottheyareamortized andhowtheyarereviewedforimpairment 1 Intangibleassetswithafinite limited life2 Intangibleassetswithanindefinitelife3 goodwill Intangibleassetswithafinitelifeareamortized Factorsshouldconsiderinestimatingtheusefullifeoftheanintangibleasset Thecalculationoftheamortizationofintangibleassetsfollowsthesameprinciplesasthedepreciationoftangibleassets EntryExample p76 Intangibleassetswithanindefinitelifearereviewedforimpairment Someindefiniteintangibleassets suchasatrademarkhaveapotentiallyindefinitelife Example p76Anintangibleassetisimpairedwhenitsfairvalueislessthanitscarryingvalue ResearchanddevelopmentCosts CostassociatedwithactivitiesexcludedfromR Dareeitherexpensedorcapitalizedaccordingtothenormalcapitalizationcriteria ExpendituresforthefollowingelementsofR DactivitiesareincludedinR Dcostsandthusexpensedasincurred 1 Materials equipment andfacilities2 Personnel3 Intangiblespurchasedfromothers4 Contractservices5 IndirectCost Identifiableintangibleassets Identifiableintangibleassetsarethoseintangiblesthatcanbepurchasedorsoldseparatelyfromtheotherassetsofthecompany Acompanycapitalizesthecostsofidentifiableintangibles Patent Apatentisanexclusiverightgrantedbythestategovernmentgivingtheownercontrolofthemanufacturing sale orotheruseofaninventionforaperiodofyearsfromthedateoffiling Apatenthasvalueifitenablesthecompanytoobtainhigherincomebysellingproductsatahigherprice producingproductsatalowercost orproducingaproductforwhichthereislesscompetition Copyrights Acopyrightisagrantbythestategovernmentcoveringtherighttopublish sell orotherwisecontrolliteraryorartisticproductsforthelifeoftheauthorplus50years Copyrightscoversuchitemsasbooks music andfilms Franchises Franchisesareagreementsenteredintobytwopartiesinwhich forafee oneparty franchisor givestheotherparty franchisee rightstoperformcertainfunctionsorsellcertainproductsorservices Afranchisecapitalizestheinitialcostitpaystoacquirethefranchise whereitexpensesthecontinuingfranchisefeesthatitpaysforservicesprovidedbythefranchisorinsubsequentyearsaccordingtothenormalmatchingcriteria Leaseandleaseholdimprovement Leaseareintangibleassetsbecausearighttousethepropertyisheldbythelessee butthepropertyitselfisstillownedbythelessor Unidentifiableintangibles Accountingforsuchgoodwilldependsonwhetheritisinternallydevelopedorpurchasedthroughatransaction Internallydevelopedgoodwill Allcompaniesdevelopunidentifiableintangibles Forexample p79Twocharacteristicsdistinguishintangiblesofthistype Acquiredgoodwill Acquiredgoodwillariseswhenacompanyisacquired Goodwillisrecordedonlywhenatransactionoccurs Recordinggoodwill Example p80 Impairmentofgoodwill ForfiscalyearsbeginningafterDecember31 2006 acompanymustreviewitsgoodwillforimpairmentatleastannuallyatthereportinglevel Acompanyreviewsthepurchasedgoodwillforimpairmentusingatwo stepapproach Ifthefairvalueofthereportingunitisgreaterthanthebookvalue goodwillisnotconsideredtobeimpaired andthesecondstepisnotnecessary EntryExample p82 3 3Investments Corporationspurchaseinvestmentsindebtorstocksecuritiesgenerallyforoneofthreereasons Accountingfordebitinvestment Debitinvestmentsareinvestmentsingovernmentandcorporationbonds Inaccountingfordebitinvestment entriesarerequiredtorecord1 theacquisition2 theinterestrevenue3 thesaleEntryExample p82 Accountingforstockinvestments Stockinvestmentsareinvestmentsinthecapitalstockofcorporations Theaccountingforinvestmentsincommonstockisbasedontheextentoftheinvestor sinfluenceovertheoperationandfinancialaffairsoftheissuingcorporation Holdinglessthan20 RecordingacquisitionofstockinvestmentsRecordingdividendsRecordingsaleofstock Accountingforstockinvestments Holdingbetween20 and50 Ifinvestorownsbetween20 and50 ofthecommonstockofacorporation itispresumedthattheinvestorhassignificantinfluenceoverthefinancialandoperatingactivitiesoftheinvestee Companieswithstockholdingbetween20 and50 inaninvest