财务会计 双语教学 financial accounting weygandt kieso kimmel ch10

John Wiley & Sons, Inc.,Financial Accounting, 5e,Prepared byKurt M. Hull, MBA CPACalifornia State University, Los Angeles,Weygandt, Kieso, & Kimmel,CHAPTER 10PLANT ASSETS,STUDY OBJECTIVESAfter studying this chapter, you should understand:,Plant assets are recorded at cost (cost principle).Cost includes all expenditures necessary to acquire the asset and make it ready for use. An assets cost includes purchase price, freight costs, and installation costs.,STUDY OBJECTIVE 1THE COST OF PLANT ASSETS,Plant asset categories:LandLand improvementsBuildingsEquipment,Land,Cash price of property,$ 100,000,Net removal cost of warehouse,6,000,Attorneys fee,1,000,Real estate brokers commission,8,000,Cost of land,$ 115,000,COST OF LAND,Land improvements are structural additions made to land, such as: 1 parking lots,2 fencing, 3 lighting4 sprinklers, etc.,Lighting,Parking Lot,COST OF LAND IMPROVEMENTS,COST OF BUILDINGS,The cost of a building depends on whether it is purchased or constructed.,COST OF EQUIPMENT,Other ongoing expenses are expensed as incurred,Entry to record the cost of machinery & related expenditures:,Factory Machinery,54,500,Cash,54,500,COST OF MACHINERY & JOURNAL ENTRY,Delivery Truck,Cash price,$ 22,000,Sales taxes,1,320,Painting and lettering,500,Cost of delivery truck,$ 23,820,The company also paid an $80 license fee, which is expensed.,Account Titles and Explanation,Debit,Credit,Delivery Truck,License Expense,Prepaid Insurance,Cash,(To record purchase of delivery,truck and related expenditures),23,820801600,25,500,COST OF TRUCK & JOURNAL ENTRY,Erin Danielle Co. purchased equipment and incurred these costs: Cash price$24,000Sales taxes 1,200Insurance during transit 200Installation and testing 400What amount should be recorded as the cost of this equipment?,REVIEW QUESTION COST OF EQUIPMENT,Answer$25,800,The allocation of an assets cost to expense over its useful life.Matches expenses with revenues.Does not result in an accumulation of cash to replace the asset.Land is not depreciated.,STUDY OBJECTIVE 2THE CONCEPT OF DEPRECIATION,Factors affecting depreciation,Cost,Salvagevalue,Usefullife,Lets use the data below in the following examples. The truck was purchased on January 1, 2006.,STUDY OBJECTIVE 3DEPRECIATION METHODS,Depreciation is the same for each year of the assets useful life.It is measured solely by the passage of time.Cost of asset - salvage value = depreciable cost,STRAIGHT-LINE METHOD,The formula for computing annual depreciation expense is:Depreciable Cost / Useful Life (in years) = Depreciation Expense,$13,000 - $1,000 = $12,000,$12,000 5 = $2,400,STRAIGHT-LINE METHOD,Useful life is expressed in terms of the total units of production expected.Total activity is a rough estimate.If productivity varies significantly from one period to another, this method is best at matching of expenses with revenues.,UNITS OF ACTIVITY,$12,000 100,000 miles = $0.12,Units ofActivity during the Year,$0.12 x 15,000 miles = $1,800,UNITS OF ACTIVITY,To use the units-of-activity method, apply the formula below:,Produces a decreasing annual depreciation expense over the assets useful life.Constant depreciation rate applied to a declining book value. Salvage value ignored in computing depreciation expense.Higher depreciation in early years is matched with higher benefits received in these years.,DECLINING BALANCE,Book ValueBeg of Year,DB Rate,AnnualDepreciationExpense,x,=,Formula for the double declining-balance method.,DB Rate,Annual Depreciation Expense,$13,000 x 40% = $5,200,DECLINING BALANCE,DDB rate is 2X the straight-line rate.,This is a change in accounting estimate. No correction of previously recorded depreciation expense.Depreciation expense for current and future is revised.,STUDY OBJECTIVE 4REVISING PERIODIC DEPRECIATION,New annualDepreciationexpense,RemainingUseful life,Remainingdepreciablecost,=,Barbs Florists decides on 1/1/09 to extend the useful life of the truck by one year. Book value is $5,800 ($13,000 - $7,200). Straight-line method used to date.The new annual depreciation is $1,600, calculated as follows:,Book value, 1/1/09,$ 5,800,Less: Salvage value,1,000,Depreciable cost,$ 4,800,Remaining useful life,3 years,(2009-2011),Revised annual depreciation ($4,800 3),$ 1,600,REVISING PERIODIC DEPRECIATION,STUDY OBJECTIVE 5EXPENDITURES DURING USEFUL LIFE,REVENUE EXPENDITURESOrdinary repairs and maintenance Immaterial in amountNo effect on useful life of assetExpensed immediately,CAPITAL EXPENDITURESAdditions and Improvements to assetsMaterial in amountExtend assets useful life,STUDY OBJECTIVE 6PLANT ASSET DISPOSALS,Asset RetirementsFully depreciatedno gain or lossNot fully depreciatedloss on retirement recorded,Asset Sales,Proceeds,Book Value,Gain or loss,-,=,GAIN ON DISPOSAL,On July 1, 2006, Wright Company sells office furniture for $16,000 cash. Original cost was $60,000.Accumulated depreciation 12-31-05 is $41,000. Depreciation for the first 6 months of 2006 is $8,000.,STEP 1Record depreciation expense up to date of sale,Cash,16,000,Accumulated Depr-Office Furniture,49,000,Office Furniture,60,000,Gain on Disposal,5,000,GAIN ON DISPOSAL,STEP 2 Compute gain on disposal,STEP 3 Record entry,Assume Wright sells the office furniture for $9,000.,The entry to record the sale and loss is:,Cash,9,000,Accumulated Depr-Office Furniture,49,000,Loss on Disposal,2,000,Office Furniture,60,000,LOSS ON DISPOSAL,Standing timber and underground deposits of oil, gas, and minerals.Distinguishing characteristics:1 They are physically extracted in operations.2 They are replaceable only by an act of nature.,STUDY OBJECTIVE 7NATURAL RESOURCES,DEPLETION,Allocation of the cost of natural resources to expense in a rational and systematic manner over the resources useful life.,Depletion expense is a function of units extracted during the period.,Very similar to units of activity method,Total Cost minus Salvage Value,DepletionCost per Unit,Number ofUnits Extracted and Sold,Annual DepletionExpense,DEPLETION FORMULA,Very similar to units of activity method,Depletion Expense,400,000,Accumulated Depletion,400,000,COMPUTING AND RECORDING DEPLETION,The Lane Coal Company invests $5 million in a mine estimated to have 10 million tons of coal and no salvage value. In the first year, 800,000 tons of coal are extracted and sold. $5,000,000 10,000,000 = $.50 depletion cost per ton $.50 X 800,000 = $400,000 depletion expense,Lane Coal Company,Balance Sheet (partial),Coal mine,$5,000,000,Less: Accumulated,depletion,400,000,$4,600,000,FINANCIAL STATEMENT PRESENTATION,Accumulated depletion is a CONTRA ASSETSimilar to accumulated depreciation.,Rights, privileges, and competitive advantages that result from the ownership of long lived assets that do not possess physical substance. Intangibles may arise from government grants, acquisition of another business, and private monopolistic arrangements.,STUDY OBJECTIVE 8INTANGIBLE ASSETS,ACCOUNTING FOR INTANGIBLE ASSETS,Exclusive right to manufacture, sell, or control an invention for 20 years from the date of grant.Initial cost is the cash or cash equivalent price paid.Legal costs incurred in successfully defending a patent are added to patent account and amortized.Amortization period is shorter of legal/useful life.,PATENTS,Patent Expense,7,500,Patents,7,500,REVIEW QUESTIONPATENTS,National Labs purchases a patent at a cost of $60,000. If the useful life of the patent is 8 years,What is the annual amortization expense?,$60,000 / 8 = $7,500,COPYRIGHTS,Exclusive right to reproduce & sell and artistic or Published work,Good for life of creator + 70 years.,Word, phrase, jingle, or symbol that IDs a particular enterprise or product.If purchased, the cost is the purchase price.If developed by a company, cost includes attorneys fees, registration fees, design costs and successful legal defense fees.,TRADEMARKS &TRADENAMES,FRANCHISES & LICENSES,A contractual agreement whereby a FRANCHISOR grants a FRANCHISE the right to sell a product, provide a service, or use certain trademarks or tradenames in a certain geographical area.,Excess of cost over the fair market value of the net assets acquired.Not amortized. Periodically reviewed for value impairment.,GOODWILL,Expenditures incurred to develop new products and processes. These costs are not intangible costs, but are usually recorded as an expense when incurred.,R&D COSTS,OWENS-ILLINOIS, INC.,Balance Sheet - Partial,(In millions of dollars),Property, plant, and equipment,Timberlands, at cost, le