财务会计概念与应用英文版Lecture9课件

Chapter9InvestmentsinProperty,Plant,andEquipmentandinIntangibleAssetsAlbrecht,Stice,Stice,Swain1COPYRIGHT©2008ThomsonSouth-Western,apartofTheThomsonCorporation.Thomson,theStarlogo,andSouth-Westernaretrademarksusedhereinunderlicense.Chapter9InvestmentsinProperLong-TermAssetsProperty,plant,andequipmentTangibleassetsacquiredfortheuseinbusinessoperations.Land,buildings,andequipment.IntangibleAssetsAssetswithoutphysicalsubstancethatareusedinbusiness.Licenses,patents,franchises,andgoodwill.2Long-TermAssetsProperty,planCapitalBudgetingCapitalbudgetingPlanningforinvestmentinlong-termassets.Long-termassetshavevaluebecausetheyhelpcompaniesgeneratefuturecashflows.Involvescomparingthecostoftheassettothevalueoftheexpectedcashflows,afteradjustingforthetimevalueofmoney.TimevalueofmoneyTheconceptthatadollartodayisworthmorethanadollarreceivedinthefuture.3CapitalBudgetingCapitalbudgeAssetAcquisitionIncludepurchaseprice.Includecostsincurredtoacquiretheassetandgettingitreadyforitsintendeduse.Salestax,shipping,installation,andothercosts.ForkLift........................ 12,500 Cash........................ 3,500 NotesPayable................ 9,000

Purchasedaforkliftfor$12,000andpaid$500for shipping;paid$3,500 cashandissuedanotefor $9,000tothebank.4AssetAcquisitionIncludepurchLeasesLeaseAcontractthatspecifiesthetermsunderwhichtheownerofanasset(thelessor)agreestotransfertherighttousetheassettoanotherparty(thelessee).Whattermsshouldbeincludedinalease?TermPaymentamountDuedates5LeasesLease5MatchLeaseTermsThepartythatisgrantedtherighttousethepropertyunderthetermsofalease.LesseeLessorOperatingLeaseCapitalLeaseTheownerofpropertythatisleased(rented)toanotherparty.Asimplerentalagreement.Aleasingtransactionthatisrecordedasapurchasebythelessee.6MatchLeaseTermsThepartythaClassifyingLeasesAleaseisclassifiedasacapitalleaseifitisnon-cancelableandmeetsoneofthefollowingcriteria:Leasetransfersownershipoftheasset.Leasecontainsabargainpurchaseoption.Leasetermisequalto75%ormoreoftheestimatedlifeoftheasset.Presentvalueoftheleasepaymentsisequalto90%ormoreofthefairmarketvalueoftheasset.7ClassifyingLeasesAleaseiscOperatingLeaseDahl&Sons,AttorneysatLaw,leasesabuildingwithmonthlyrentalpaymentsof$1,000.Maketheappropriateentryifrentispaidincashthefirstmonth.Rent(orLease)Expense.......... 1,000 Cash........................ 1,000 Torecordmonthlyrentofstoragebuilding.8OperatingLeaseDahl&Sons,AtCapitalLeaseDahl&Sonsentersintoanon-cancelableleaseagreementthatrequiresleasepaymentsof$100,000ayearfor20years.Attheendof20years,Dahl&Sonswillowntheproperty.Thepresentvalueoftheleasepaymentsata10%discountrateis$851,360.Maketheappropriateentries.LeasedProperty................ 851,360 LeaseLiability................ 851,360 Torecordcommercialbuildingacquiredundera 20-yearnon-cancelablelease.LeaseLiability.................. 14,864 InterestExpense................ 85,136 Cash........................ 100,000 Torecordannualpaymentundercapitallease.9CapitalLeaseDahl&SonsenterAssetsAcquiredby

SelfConstructionSelf-constructedassetsRecordedatcost.Includeallexpendituresincurredtobuildtheassetandmakeitreadyforitsintendeduse.Costsinclude:Materialsusedtobuildtheasset.Theconstructionlabor.Capitalizedinterest.Somereasonableshareofthegeneralcompanyoverhead.10AssetsAcquiredby

SelfConstrBasketPurchases

%Whentwoormoreassetsareacquiredatasingleprice,thepricesareallocatedonthe“relativefairmarketvalue”method.Inthisexample,DahlandSonspurchasedlandandabuildingatatotalcostof$3,600,000.Preparetheentrytorecordthepurchase.

Land........................... 900,000 Building........................ 2,700,000 Cash........................ 3,600,000

Torecordbuildingandlandacquiredfor$3,600,000.

3,000,000100$3,600,000AssetFMV%ofTotalValueCostLand$1,000,000

25%0.25x$3,600,000=$900,000Building

750.75x$3,600,000=

2,700,000Total$4,000,00011BasketPurchases%WhentDepreciationDepreciationTheprocessofcostallocationthatassignstheoriginalcostofplantandequipmenttotheperiodsbenefited.BookvalueTheassetsoriginalcostlessanyaccumulateddepreciation.SalvagevalueTheamountexpectedtobereceivedwhentheassetissoldattheendofitsusefullife.12DepreciationDepreciation12Straight-LineDepreciationCostsassignedequallytoallperiodsbenefited.AnnualDepreciationExpense=Cost-SalvagevalueEstimatedusefullife(years)=$24,000-$2,0004years$5,500DepreciationExpense................. 5,500 AccumulatedDepreciation........... 5,500 Torecordannualdepreciationfortruck.13Straight-LineDepreciationCostUnits-of-ProductionDepreciationAssigningdepreciationaccordingtowhathasbeenusedduringtheyear.PerUnitDepreciation=Cost-SalvagevalueEstimatedlifeinunitsDepreciationExpense=PerunitdepreciationxUnitsproducedDepreciationExpense................. 4,400 AccumulatedDepreciation........... 4,400 Torecordannualdepreciationfortruck.($24,000-$2,000)60,000milesx12,000miles=$4,40014Units-of-ProductionDepreciatiPartial-YearDepreciationStraight-linemethodCalculatedepreciationexpensefortheyear.Distributeitevenlyoverthenumberofmonthstheassetisheldduringtheyear.Units-of-productionmethodThesameasnormalbecauseitisbasedoffoftheactualusage.15Partial-YearDepreciationStraiRepairingandImprovingAssetsOrdinaryexpendituresTypicallybenefitonlytheperiodinwhichtheyaremade.(i.e.repairs,maintenance,andminorimprovements.)Expensewhenincurred.CapitalexpendituresSignificantinamountandbenefitmorethanthecurrentperiod.Increasetheproductivelifeorcapacityoftheasset.(i.e.engineoverhaul,componentsadded.)Capitalizeandaddtoassetvalue.Depreciatedovertheremaininglifeoftheasset.16RepairingandImprovingAssetsImpairmentsImpairmentAdeclineinthevalueofalong-termoperatingasset.SumofFutureCashFlowsfromAssetBookValueofAssetIsSumofFutureCashFlowsLessthantheBookValue?IMPAIRMENTRecognizeLossandRecordAssetatFAIRVALUE.NOIMPAIRMENTContinuetoRecognizeAssetatBOOKVALUE.YESNO17ImpairmentsImpairmentSumofFuImpairmentsJournalentryreducespropertyvalueaslistedonbalancesheetandclearsouttheaccumulateddepreciation.IncreasesinassetvaluescanneverberecognizedaccordingtoGAAP.AccumulatedDepreciation.............4,000LossonImpairmentofEquipment......1,000 Building.......................... 5,000 Torecordimpairmentofbuilding.18ImpairmentsJournalentryreducDiscardingandSellingLong-TermAssetsAnasset’scostandaccumulateddepreciationmustberemovedfromtheaccountingrecords.Assetscanbe:Discarded(scrapped)SoldExchanged19DiscardingandSellingLong-TeDiscardingProperty,Plant,andEquipment

AccumulatedDepreciation,Conveyor... 15,000 LossonDisposalofConveyor......... 300 Conveyor........................ 15,000 Cash............................ 300 Scrapped$15,000copierandpaid$300disposal costs.Dahl&Sonspurchasedanadvancecopiersystemfor$15,000.Ithasa5-yearlife,nosalvagevalue,andisdepreciatedonastraight-linebasis.IfFrankpays$300tohavethecopierremoved,whatistheappropriateentry?20DiscardingProperty,Plant,anSellingProperty,Plant,andEquipment

Cash............................... 600 AccumulatedDepreciation,Conveyor... 12,000 LossonSaleofConveyor............. 2,400 Conveyor......................... 15,000 Sold$15,000copieratalossof$2,400.Dahl&Sonspurchasedanadvancedcopiersystemfor$15,000.Ithasa5-yearlife,nosalvagevalue,andisdepreciatedonastraight-linebasis.Ifthecopierissoldfor$600afteronlyfouryearsofservice,Dahl&Sonswillexperiencealossof$2,400.Maketheappropriateentry.Lossesareincurredwhentheassetissoldforlessthanthebookvalueandgainsarerecordedwhentheassetissoldformorethanthebookvalue.21SellingProperty,Plant,andEAccountingforIntangiblesIntangiblesRightsandprivilegesthatare:Long-lived.Notheldforresale.Havenophysicalsubstance.Providingownerwithcompetitiveadvantageoverotherfirms.AmortizationPeriodicallocationtoexpenseofanintangibleasset’scost.Conceptually,thesameasdepreciation.Intangibleassetsgenerallyusestraight-lineamortization.22AccountingforIntangiblesIntaTypesofIntangiblesPatentAnexclusiverightgrantedfor17yearsbytheU.S.FederalGovernmenttomanufactureandsellaninvention.FranchiseAnentitythathasbeenlicensedtoselltheproductofamanufacturerortoofferaparticularserviceinagivenarea.LicenseTherighttoperformcertainactivities,generallygrantedbyagovernmentagency.23TypesofIntangiblesPatent23RecognizingIntangibleAssetsIntangibleassetsareonlyrecognizedinthefinancialstatementsiftheyhavebeenpurchased.Amortizeovertheeconomiclifeoftheintangibleasset.Intangibleassetswithindefinitelivesarenotamortized.Intangibleassetsmustbeanalyzedtodetermineifimpairmenthasoccurred.24RecognizingIntangibleAssetsIGoodwillGoodwillAnintangibleassetthatexistswhenabusinessisvaluedatmorethanthefairmarketvalueofitsnetassets,usuallydueto:StrategiclocationReputationGoodcustomerrelationsEqualtotheexcessofthepurchasepriceoverthefairmarketvalueofthenetassetspurchased.25GoodwillGoodwill25AccountingforGoodwillDahl&SonspurchasedClark&Associatesfor$1,200,000.Atthetime,thefollowingmarketvaluesexistedforClark’sassetsandliabilities:Inventory $750,000Long-termoperatingassets 220,000Otherassets 25,000Liabilities (18,000) TotalNetAssets $977,000

Inventory...................... 750,000 Long-TermOperatingAssets.... 220,000 OtherAssets.................. 25,000 Goodwill..................... 223,000 Liabilities.................. 18,000 Cash...................... 1,200,000 PurchasedClark&Associatesfor$1,200,000.26AccountingforGoodwillDahl&MeasuringtheManagementofLong-TermAssetsFixedAssetTurnoverTheamountofdollarsinsalesgeneratedbyeachdollaroffixedassets.Standardvaluesforthisratiodifferfromindustrytoindustry. SalesAveragePP&E27MeasuringtheManagementofLoAcceleratedDepreciationMethodsDeclining-balancemethodAnasset’sbookvalueismultipliedbyaconstantdepreciationrate.Thisisdoublethestraight-linepercentageinthecaseofdouble-decliningbalance(DDB).Sum-of-the-years’-digitsmethodAconstantbalance(costminussalvagevalue)ismultipliedbyadecliningdepreciationratecalculatedbasedoffofthesumoftheyears.28AcceleratedDepreciationMethoDouble-Declining-BalanceX2=Double-DecliningBalanceDepreciationExpenseBookValueAsset’sLifeinYearsBookValue=Cost–AccumulatedDepreciationYear1($12,000–0)4X2=$6,000Year2($12,000–$6,000)4X2=$3,000Dahl&Sonspurchasedatruckfor$12,000.Thetruckhasasalvagevalueof$2,000andausefullifeof4years.ComputedepreciationusingtheDDBdepreciationmethodforthefirst2years.29Double-Declining-BalanceX2=DSum-of-Years’-DigitsMethodSumoftheyearsoftheasset’slifeSum-of-the-Year’s-Digits(Cost–SalvageValue)CurrentYear/(4+3+2+1)Year1($12,000–$2,000)4/(4+3+2+1)

=$4,000Year2($12,000–$2,000)3/(4+3+2+1)=$3,000Dahl&Sonspurchasedatruckfor$12,000.Thetruckhasasalvagevalueof$2,000andausefullifeof4years.ComputedepreciationusingtheSYDdepreciationmethodforthefirst2years.30Sum-of-Years’-DigitsMethodSumChangeinDepreciationEstimatesandMethodsDepreciationisonlyanestimate.Changesinestimatesofusefullifeandsalvagevaluemayoccur.Changesinmethodcanalsooccur.Whenthereisachangeinestimate,pastperiods’depreciationamountsremainthesame.31ChangeinDepreciationEstimatChangeinEstimatesDahl&Sonspurchasedatruckfor$24,000witha$2,000salvagevalueanda4-yearusefullife.After3years,betterinformationrevealsthetruckhasa6-yearusefullifeanda$3,000salvagevalue.Calculateanewdepreciationexpenseforthenextthreeyears.32ChangeinEstimatesDahl&SonsChapter9InvestmentsinProperty,Plant,andEquipmentandinIntangibleAssetsAlbrecht,Stice,Stice,Swain33COPYRIGHT©2008ThomsonSouth-Western,apartofTheThomsonCorporation.Thomson,theStarlogo,andSouth-Westernaretrademarksusedhereinunderlicense.Chapter9InvestmentsinProperLong-TermAssetsProperty,plant,andequipmentTangibleassetsacquiredfortheuseinbusinessoperations.Land,buildings,andequipment.IntangibleAssetsAssetswithoutphysicalsubstancethatareusedinbusiness.Licenses,patents,franchises,andgoodwill.34Long-TermAssetsProperty,planCapitalBudgetingCapitalbudgetingPlanningforinvestmentinlong-termassets.Long-termassetshavevaluebecausetheyhelpcompaniesgeneratefuturecashflows.Involvescomparingthecostoftheassettothevalueoftheexpectedcashflows,afteradjustingforthetimevalueofmoney.TimevalueofmoneyTheconceptthatadollartodayisworthmorethanadollarreceivedinthefuture.35CapitalBudgetingCapitalbudgeAssetAcquisitionIncludepurchaseprice.Includecostsincurredtoacquiretheassetandgettingitreadyforitsintendeduse.Salestax,shipping,installation,andothercosts.ForkLift........................ 12,500 Cash........................ 3,500 NotesPayable................ 9,000

Purchasedaforkliftfor$12,000andpaid$500for shipping;paid$3,500 cashandissuedanotefor $9,000tothebank.36AssetAcquisitionIncludepurchLeasesLeaseAcontractthatspecifiesthetermsunderwhichtheownerofanasset(thelessor)agreestotransfertherighttousetheassettoanotherparty(thelessee).Whattermsshouldbeincludedinalease?TermPaymentamountDuedates37LeasesLease5MatchLeaseTermsThepartythatisgrantedtherighttousethepropertyunderthetermsofalease.LesseeLessorOperatingLeaseCapitalLeaseTheownerofpropertythatisleased(rented)toanotherparty.Asimplerentalagreement.Aleasingtransactionthatisrecordedasapurchasebythelessee.38MatchLeaseTermsThepartythaClassifyingLeasesAleaseisclassifiedasacapitalleaseifitisnon-cancelableandmeetsoneofthefollowingcriteria:Leasetransfersownershipoftheasset.Leasecontainsabargainpurchaseoption.Leasetermisequalto75%ormoreoftheestimatedlifeoftheasset.Presentvalueoftheleasepaymentsisequalto90%ormoreofthefairmarketvalueoftheasset.39ClassifyingLeasesAleaseiscOperatingLeaseDahl&Sons,AttorneysatLaw,leasesabuildingwithmonthlyrentalpaymentsof$1,000.Maketheappropriateentryifrentispaidincashthefirstmonth.Rent(orLease)Expense.......... 1,000 Cash........................ 1,000 Torecordmonthlyrentofstoragebuilding.40OperatingLeaseDahl&Sons,AtCapitalLeaseDahl&Sonsentersintoanon-cancelableleaseagreementthatrequiresleasepaymentsof$100,000ayearfor20years.Attheendof20years,Dahl&Sonswillowntheproperty.Thepresentvalueoftheleasepaymentsata10%discountrateis$851,360.Maketheappropriateentries.LeasedProperty................ 851,360 LeaseLiability................ 851,360 Torecordcommercialbuildingacquiredundera 20-yearnon-cancelablelease.LeaseLiability.................. 14,864 InterestExpense................ 85,136 Cash........................ 100,000 Torecordannualpaymentundercapitallease.41CapitalLeaseDahl&SonsenterAssetsAcquiredby

SelfConstructionSelf-constructedassetsRecordedatcost.Includeallexpendituresincurredtobuildtheassetandmakeitreadyforitsintendeduse.Costsinclude:Materialsusedtobuildtheasset.Theconstructionlabor.Capitalizedinterest.Somereasonableshareofthegeneralcompanyoverhead.42AssetsAcquiredby

SelfConstrBasketPurchases

%Whentwoormoreassetsareacquiredatasingleprice,thepricesareallocatedonthe“relativefairmarketvalue”method.Inthisexample,DahlandSonspurchasedlandandabuildingatatotalcostof$3,600,000.Preparetheentrytorecordthepurchase.

Land........................... 900,000 Building........................ 2,700,000 Cash........................ 3,600,000

Torecordbuildingandlandacquiredfor$3,600,000.

3,000,000100$3,600,000AssetFMV%ofTotalValueCostLand$1,000,000

25%0.25x$3,600,000=$900,000Building

750.75x$3,600,000=

2,700,000Total$4,000,00043BasketPurchases%WhentDepreciationDepreciationTheprocessofcostallocationthatassignstheoriginalcostofplantandequipmenttotheperiodsbenefited.BookvalueTheassetsoriginalcostlessanyaccumulateddepreciation.SalvagevalueTheamountexpectedtobereceivedwhentheassetissoldattheendofitsusefullife.44DepreciationDepreciation12Straight-LineDepreciationCostsassignedequallytoallperiodsbenefited.AnnualDepreciationExpense=Cost-SalvagevalueEstimatedusefullife(years)=$24,000-$2,0004years$5,500DepreciationExpense................. 5,500 AccumulatedDepreciation........... 5,500 Torecordannualdepreciationfortruck.45Straight-LineDepreciationCostUnits-of-ProductionDepreciationAssigningdepreciationaccordingtowhathasbeenusedduringtheyear.PerUnitDepreciation=Cost-SalvagevalueEstimatedlifeinunitsDepreciationExpense=PerunitdepreciationxUnitsproducedDepreciationExpense................. 4,400 AccumulatedDepreciation........... 4,400 Torecordannualdepreciationfortruck.($24,000-$2,000)60,000milesx12,000miles=$4,40046Units-of-ProductionDepreciatiPartial-YearDepreciationStraight-linemethodCalculatedepreciationexpensefortheyear.Distributeitevenlyoverthenumberofmonthstheassetisheldduringtheyear.Units-of-productionmethodThesameasnormalbecauseitisbasedoffoftheactualusage.47Partial-YearDepreciationStraiRepairingandImprovingAssetsOrdinaryexpendituresTypicallybenefitonlytheperiodinwhichtheyaremade.(i.e.repairs,maintenance,andminorimprovements.)Expensewhenincurred.CapitalexpendituresSignificantinamountandbenefitmorethanthecurrentperiod.Increasetheproductivelifeorcapacityoftheasset.(i.e.engineoverhaul,componentsadded.)Capitalizeandaddtoassetvalue.Depreciatedovertheremaininglifeoftheasset.48RepairingandImprovingAssetsImpairmentsImpairmentAdeclineinthevalueofalong-termoperatingasset.SumofFutureCashFlowsfromAssetBookValueofAssetIsSumofFutureCashFlowsLessthantheBookValue?IMPAIRMENTRecognizeLossandRecordAssetatFAIRVALUE.NOIMPAIRMENTContinuetoRecognizeAssetatBOOKVALUE.YESNO49ImpairmentsImpairmentSumofFuImpairmentsJournalentryreducespropertyvalueaslistedonbalancesheetandclearsouttheaccumulateddepreciation.IncreasesinassetvaluescanneverberecognizedaccordingtoGAAP.AccumulatedDepreciation.............4,000LossonImpairmentofEquipment......1,000 Building.......................... 5,000 Torecordimpairmentofbuilding.50ImpairmentsJournalentryreducDiscardingandSellingLong-TermAssetsAnasset’scostandaccumulateddepreciationmustberemovedfromtheaccountingrecords.Assetscanbe:Discarded(scrapped)SoldExchanged51DiscardingandSellingLong-TeDiscardingProperty,Plant,andEquipment

AccumulatedDepreciation,Conveyor... 15,000 LossonDisposalofConveyor......... 300 Conveyor........................ 15,000 Cash............................ 300 Scrapped$15,000copierandpaid$300disposal costs.Dahl&Sonspurchasedanadvancecopiersystemfor$15,000.Ithasa5-yearlife,nosalvagevalue,andisdepreciatedonastraight-linebasis.IfFrankpays$300tohavethecopierremoved,whatistheappropriateentry?52DiscardingProperty,Plant,anSellingProperty,Plant,andEquipment

Cash............................... 600 AccumulatedDepreciation,Conveyor... 12,000 LossonSaleofConveyor............. 2,400 Conveyor......................... 15,000 Sold$15,000copieratalossof$2,400.Dahl&Sonspurchasedanadvancedcopiersystemfor$15,000.Ithasa5-yearlife,nosalvagevalue,andisdepreciatedonastraight-linebasis.Ifthecopierissoldfor$600afteronlyfouryearsofservice,Dahl&Sonswillexperiencealossof$2,400.Maketheappropriateentry.Lossesareincurredwhentheassetissoldforlessthanthebookvalueandgainsarerecordedwhentheassetissoldformorethanthebookvalue.53SellingProperty,Plant,andEAccountingforIntangiblesIntangiblesRightsandprivilegesthatare:Long-lived.Notheldforresale.Havenophysicalsubstance.Providingownerwithcompetitiveadvantageoverotherfirms.AmortizationPeriodicallocationtoexpenseofanintangibleasset’scost.Conceptually,thesameasdepreciation.Intangibleassetsgenerallyusestraight-lineamortization.54AccountingforIntangiblesIntaTypesofIntangiblesPatentAnexclusiverightgrantedfor17yearsbytheU.S.FederalGovernmenttomanufactureandsellaninvention.FranchiseAnentitythathasbeenlicensedtoselltheproductofamanufacturerortoofferaparticularserviceinagivenarea.LicenseTherighttoperformcertainactivities,generallygrantedbyagovernmentagency.55TypesofIntangiblesPatent23RecognizingIntangibleAssetsIntangibleassetsareonlyrecognizedinthefinancialstatementsiftheyhavebeenpurchased.Amortizeovertheeconomiclifeoftheintangibleasset.Intangibleassetswithindefinitelivesarenotamortized.Intangibleassetsmustbeanalyzedtodetermineifimpairmenthasoccurred.56RecognizingIntangibleAssetsIGoodwillGoodwillAnintangibleassetthatexistswhenabusinessisvaluedatmorethanthefairmarketvalueofitsnetassets,usuallydueto:StrategiclocationReputationGoodcustomerrelationsEqualtotheexcessofthepurchasepriceoverthefairmarketvalueofthenetassetspurchased.57GoodwillGoodwill25AccountingforGoodwillDahl&SonspurchasedClark&Associatesfor$1,200,000.Atthetime,thefollowingmarketvaluesexistedforClark’sassetsandliabilities:Inventory $750,000Long-termoperatingassets 220,000Otherassets 25,000Liabili