财务会计概念与应用英文版Lecture 9.ppt

COPYRIGHT2008ThomsonSouth-Western,apartofTheThomsonCorporation.Thomson,theStarlogo,andSouth-Westernaretrademarksusedhereinunderlicense.,1,Chapter9,InvestmentsinProperty,Plant,andEquipmentandinIntangibleAssets,Albrecht,Stice,Stice,Swain,2,Long-TermAssets,Property,plant,andequipmentTangibleassetsacquiredfortheuseinbusinessoperations.Land,buildings,andequipment.IntangibleAssetsAssetswithoutphysicalsubstancethatareusedinbusiness.Licenses,patents,franchises,andgoodwill.,3,CapitalBudgeting,CapitalbudgetingPlanningforinvestmentinlong-termassets.Long-termassetshavevaluebecausetheyhelpcompaniesgeneratefuturecashflows.Involvescomparingthecostoftheassettothevalueoftheexpectedcashflows,afteradjustingforthetimevalueofmoney.TimevalueofmoneyTheconceptthatadollartodayisworthmorethanadollarreceivedinthefuture.,4,AssetAcquisition,Includepurchaseprice.Includecostsincurredtoacquiretheassetandgettingitreadyforitsintendeduse.Salestax,shipping,installation,andothercosts.,5,Leases,LeaseAcontractthatspecifiesthetermsunderwhichtheownerofanasset(thelessor)agreestotransfertherighttousetheassettoanotherparty(thelessee).Whattermsshouldbeincludedinalease?TermPaymentamountDuedates,6,MatchLeaseTerms,Thepartythatisgrantedtherighttousethepropertyunderthetermsofalease.,Lessee,Lessor,OperatingLease,CapitalLease,Theownerofpropertythatisleased(rented)toanotherparty.,Asimplerentalagreement.,Aleasingtransactionthatisrecordedasapurchasebythelessee.,7,ClassifyingLeases,Aleaseisclassifiedasacapitalleaseifitisnon-cancelableandmeetsoneofthefollowingcriteria:Leasetransfersownershipoftheasset.Leasecontainsabargainpurchaseoption.Leasetermisequalto75%ormoreoftheestimatedlifeoftheasset.Presentvalueoftheleasepaymentsisequalto90%ormoreofthefairmarketvalueoftheasset.,8,OperatingLease,Dahl&Sons,AttorneysatLaw,leasesabuildingwithmonthlyrentalpaymentsof$1,000.Maketheappropriateentryifrentispaidincashthefirstmonth.,9,CapitalLease,Dahl&Sonsentersintoanon-cancelableleaseagreementthatrequiresleasepaymentsof$100,000ayearfor20years.Attheendof20years,Dahl&Sonswillowntheproperty.Thepresentvalueoftheleasepaymentsata10%discountrateis$851,360.Maketheappropriateentries.,10,AssetsAcquiredbySelfConstruction,Self-constructedassetsRecordedatcost.Includeallexpendituresincurredtobuildtheassetandmakeitreadyforitsintendeduse.Costsinclude:Materialsusedtobuildtheasset.Theconstructionlabor.Capitalizedinterest.Somereasonableshareofthegeneralcompanyoverhead.,11,BasketPurchases,%,Whentwoormoreassetsareacquiredatasingleprice,thepricesareallocatedonthe“relativefairmarketvalue”method.Inthisexample,DahlandSonspurchasedlandandabuildingatatotalcostof$3,600,000.Preparetheentrytorecordthepurchase.,12,Depreciation,DepreciationTheprocessofcostallocationthatassignstheoriginalcostofplantandequipmenttotheperiodsbenefited.BookvalueTheassetsoriginalcostlessanyaccumulateddepreciation.SalvagevalueTheamountexpectedtobereceivedwhentheassetissoldattheendofitsusefullife.,13,Straight-LineDepreciation,Costsassignedequallytoallperiodsbenefited.,14,Units-of-ProductionDepreciation,Assigningdepreciationaccordingtowhathasbeenusedduringtheyear.,15,Partial-YearDepreciation,Straight-linemethodCalculatedepreciationexpensefortheyear.Distributeitevenlyoverthenumberofmonthstheassetisheldduringtheyear.Units-of-productionmethodThesameasnormalbecauseitisbasedoffoftheactualusage.,16,RepairingandImprovingAssets,OrdinaryexpendituresTypicallybenefitonlytheperiodinwhichtheyaremade.(i.e.repairs,maintenance,andminorimprovements.)Expensewhenincurred.CapitalexpendituresSignificantinamountandbenefitmorethanthecurrentperiod.Increasetheproductivelifeorcapacityoftheasset.(i.e.engineoverhaul,componentsadded.)Capitalizeandaddtoassetvalue.Depreciatedovertheremaininglifeoftheasset.,17,Impairments,ImpairmentAdeclineinthevalueofalong-termoperatingasset.,SumofFutureCashFlowsfromAsset,BookValueofAsset,IsSumofFutureCashFlowsLessthantheBookValue?,IMPAIRMENTRecognizeLossandRecordAssetatFAIRVALUE.,NOIMPAIRMENTContinuetoRecognizeAssetatBOOKVALUE.,YES,NO,18,Impairments,Journalentryreducespropertyvalueaslistedonbalancesheetandclearsouttheaccumulateddepreciation.IncreasesinassetvaluescanneverberecognizedaccordingtoGAAP.,19,DiscardingandSellingLong-TermAssets,Anassetscostandaccumulateddepreciationmustberemovedfromtheaccountingrecords.Assetscanbe:Discarded(scrapped)SoldExchanged,20,DiscardingProperty,Plant,andEquipment,Dahl&Sonspurchasedanadvancecopiersystemfor$15,000.Ithasa5-yearlife,nosalvagevalue,andisdepreciatedonastraight-linebasis.IfFrankpays$300tohavethecopierremoved,whatistheappropriateentry?,21,SellingProperty,Plant,andEquipment,Dahl&Sonspurchasedanadvancedcopiersystemfor$15,000.Ithasa5-yearlife,nosalvagevalue,andisdepreciatedonastraight-linebasis.Ifthecopierissoldfor$600afteronlyfouryearsofservice,Dahl&Sonswillexperiencealossof$2,400.Maketheappropriateentry.,Lossesareincurredwhentheassetissoldforlessthanthebookvalueandgainsarerecordedwhentheassetissoldformorethanthebookvalue.,22,AccountingforIntangibles,IntangiblesRightsandprivilegesthatare:Long-lived.Notheldforresale.Havenophysicalsubstance.Providingownerwithcompetitiveadvantageoverotherfirms.AmortizationPeriodicallocationtoexpenseofanintangibleassetscost.Conceptually,thesameasdepreciation.Intangibleassetsgenerallyusestraight-lineamortization.,23,TypesofIntangibles,PatentAnexclusiverightgrantedfor17yearsbytheU.S.FederalGovernmenttomanufactureandsellaninvention.FranchiseAnentitythathasbeenlicensedtoselltheproductofamanufacturerortoofferaparticularserviceinagivenarea.LicenseTherighttoperformcertainactivities,generallygrantedbyagovernmentagency.,24,RecognizingIntangibleAssets,Intangibleassetsareonlyrecognizedinthefinancialstatementsiftheyhavebeenpurchased.Amortizeovertheeconomiclifeoftheintangibleasset.Intangibleassetswithindefinitelivesarenotamortized.Intangibleassetsmustbeanalyzedtodetermineifimpairmenthasoccurred.,25,Goodwill,GoodwillAnintangibleassetthatexistswhenabusinessisvaluedatmorethanthefairmarketvalueofitsnetassets,usuallydueto:StrategiclocationReputationGoodcustomerrelationsEqualtotheexcessofthepurchasepriceoverthefairmarketvalueofthenetassetspurchased.,26,AccountingforGoodwill,Dahl&SonspurchasedClark&Associatesfor$1,200,000.Atthetime,thefollowingmarketvaluesexistedforClarksassetsandliabilities:,27,MeasuringtheManagementofLong-TermAssets,FixedAssetTurnoverTheamountofdollarsinsalesgeneratedbyeachdollaroffixedassets.Standardvaluesforthisratiodifferfromindustrytoindustry.,28,AcceleratedDepreciationMethods,Declining-balancemethodAnassetsbookvalueismultipliedbyaconstantdepreciationrate.Thisisdoublethestraight-linepercentageinthecaseofdouble-decliningbalance(DDB).Sum-of-the-years-digitsmethodAconstantbalance(costminussalvagevalue)ismultipliedbyadecliningdepreciationratecalculatedbasedoffofthesumoftheyears.,29,Double-Declining-Balance,X2=,Dahl&Sonspurchasedatruckfor$12,000.Thetruckhasasalva