会计英语简明版-Lesson-7-Longterm-Assets课件

YESUNAccountingEnglish@20091

Lesson7

Long-termAssetsYESUNAccountingEnglish@20092Typeoflong-termassetsInvestmentPP&ENaturalresourcesIntangibleassetsOtherassetsYESUNAccountingEnglish@20093

InvestmentsindebtsecuritiesYESUNAccountingEnglish@20094DebtSecurities:TypesandReportedAmountsDebtInstrumentsrepresentingaCREDITORrelationshipM.V.changesrecordedaspartofincomeM.V.changesrecordedasotherincomeoraspartofequityM.V.changesnotrecognizedTRADINGSecuritiesAvailableforSaleHeld-to-MaturityRecordatfairvalueRecordatfairvalueRecordatAmortizedcostYESUNAccountingEnglish@20095TradingSecuritiesTradingsecuritiesareusedtogenerateprofitsfromshorttermdifferencesinprices.Theholdingperiodisusuallylessthan3 monthsThesecuritiesarereportedatfairvalueUnrealizedgainsandlossesarereportedaspartofnetincomeAnydiscountorpremiumisnotamortized.YESUNAccountingEnglish@20096Available-for-SaleDebtSecuritiesTheseinvestmentsarereportedatfairvalueinthebalancesheet.Differencesbetweenthefairvalueandamortizedcostarereportedasunrealizedholdinggainsandlosses(partofequity)Whenrealized,gainsandlossesinfairvaluearereportedaspartofnetincomeYESUNAccountingEnglish@20097Held-to-MaturityDebtSecuritiesTheoperatingentityhasboth:apositiveintenttoholdthesecurities,andtheabilitytoholdthemtomaturityThesesecuritiesareaccountedforatamortizedcost,notfairvalue.YESUNAccountingEnglish@20098InvestmentsinDebtSecurities:ExampleInvestmentindebtsecurity:(Issueatadiscount)Costtoinvestingentity: $924,183Parvalue: $1,000,000Discount $75,817Effectiverateofinterest: 10%Stated(contractual)rate: 8%

Fairvalueofsecurity:Endofyear1 $1,000,000Endofyear2 $975,000ComputegainsorlossesforthethreetypesofdebtsecuritiesYESUNAccountingEnglish@20099InvestmentsinDebtSecurities:ExampleGiven:

InvestmentinDebtSecurity

AmortizationSchedule(DiscountIssue)CarryingInterestCashReceivedAmortized

Value(beg)

Revenue

forInterest

cost(end) 924,183924,183 92,418 80,000 936,601936,601 93,660 80,000 950,262Endofyear

Fair

Value(inmil)1,000,000975,000Effectiverate=10%;StatedRate=8%;Par=$1,000,000

YESUNAccountingEnglish@200910

InvestmentsinDebtSecurities:TradingSecurityComputegain:FMVlessAcquisitioncost $1,000,000less$924,183=$75,817SecuritiesFairValue(Trading)75,817UnrealizedHoldingGain orLoss-Income 75,817AddtoTradingSecuritiesinbalancesheetReportasincomeYESUNAccountingEnglish@200911DeterminingUnrealizedgainorloss:FMVendofyear1: $1,000,000Amortizedcostendofyear1 $936,601Unrealizedgain(year1): $63,399SecuritiesFairValueAdjustment63,399UnrealizedHoldingGainorLoss 63,399InvestmentsinDebtSecurities:Available-for-SaleSecurity(year1)AddtoAvailable-for-SaleSecuritiesinbalancesheetReportaspartofequityYESUNAccountingEnglish@200912DeterminingUnrealizedgainorloss:FMVendofyear2: $975,000Amortizedcostendofyear2 $950,262Unrealizedgain(year2): $24,738UnrealizedHoldingGainorLoss 38661SecuritiesFairValueAdjustment 38661InvestmentsinDebtSecurities:Available-for-SaleSecurity(year2)Unreal.g&L:Endofyear1:$63,399credit Endofyear2:$24,738credit

Reverse$38661debit

YESUNAccountingEnglish@200913InvestmentsinDebtSecurities:Held-to-MaturitySecurityNoentryisneededforfairvalueadjustment.Fairvaluechangesarenotrecognizedat balancesheetdateShowsecurityatamortizedcostYESUNAccountingEnglish@200914InvestmentinequitysecuritiesYESUNAccountingEnglish@200915EquitySecuritiesEquitysecuritiesrepresentownershipinterestssuchascommon,preferred,orothercapitalstock.TheyincluderightstobuyandselltheownershipinterestsConvertibledebtandredeemablepreferredstockarenotequitysecuritiesforthispurposeTheextentofownershipincommonstockbyaninvestorinaninvesteedeterminestheaccountingtreatmentforequitysecurities.YESUNAccountingEnglish@200916InvestmentsinEquityInterests:Control0% 20%

50% 100%OwnershipPercentageLittle Significant CONTROL

ornoneLevelofInfluenceYESUNAccountingEnglish@200917InvestmentinEquitySecurities:AvailableforSaleSecuritiesSecuritieswhenacquiredarerecordedatcostSubsequenttoacquisition,theinvestmentsarevaluedandreportedatfairvalueInvestordoesnotrecognizeitsproportionateshareofinvestee’snetincome,unlessdividendsaredeclaredbyinvestee.Unrealizedholdinggainsandlossesarereportedas:partofcomprehensiveincome,andacomponentofstockholders’equityYESUNAccountingEnglish@200918Whenmarketvaluenotavailable,usecostmethod1.Underthecostmethod,anequitysecurityinvestmentiscarriedatitsacquisitioncost,includingbrokeragefeesandotherincidentalcosts.2.Underthecostmethod,dividendsreceivedfrominvesteearerecognizedasrevenuewhenitwasdeclared.

YESUNAccountingEnglish@200919Costmethod3.Underthecostmethod,theinvestmentaccountmustbereducediftheinvestorreceivesdividendsinexcessoftheinvestor'spercentageshareofearnings.Sincetheamountofinvestmentincomerecognizedbytheinvestingenterpriseshouldbelimitedtotheamountdistributedoutofaccumulatednetprofitsoftheinvesteeenterprisethataroseaftertheinvestmentwasmade.YESUNAccountingEnglish@200920Costmethod4.

Whenaninvestorownslessthan20%ofthecommonstockofanothercorporation,itispresumedthattheinvestorhasrelativelylittleinfluenceontheinvestee.Asaresult,netincomeearnedbytheinvesteeisnotconsideredaproperbasisforrecognizingincomefromtheinvestmentbytheinvestor.Thereasonisthattheinvesteemaychoosetoretainforuseinthebusinessincreasednetassetsresultingfromprofitableoperations.Therefore,netincomeisnotconsideredearnedbytheinvestoruntilcashdividendsaredeclaredbytheinvestee.YESUNAccountingEnglish@200921InvestmentsinEquitySecurities:EquityMethodAsubstantiveeconomicrelationshipisacknowledgedbetweentheinvestorandtheinvesteeTheinvestment’scarryingvalueisincreasedby investor’sproportionateshareofearningsTheinvestment’scarryingvalueisdecreasedby:investor’sproportionateshareoflossesdividendsreceivedbyinvesteeYESUNAccountingEnglish@200922InvestmentsinEquitySecurities:ConsolidationAvotinginterestofmorethan50%resultsinacontrollinginterestTheinvestoristheparentcorporation;theinvesteeisthesubsidiarycorporation.TheinvestorpreparesconsolidatedfinancialstatementsfortheparentandthesubsidiaryTheinvestoraccountsfortheinvestmentonitsbooksbyfairvalueorcostmethodintheindividualfinancialstatementsYESUNAccountingEnglish@200923InvestmentsinEquitySecurities:SummaryOwnershipinCapitalStocklessthan20%ofvoting20-50%ofvotingmorethan50%votingTradingAvailableforSaleEquitymethodConsolidationFairvalueFairvalueFVorcostmethodInindividualBS

NoConsolidationYESUNAccountingEnglish@200924EquitySecurities:AccountingbyCategoryCategory Valuation UnrealizedHolding OtherIncome GainsandLosses Effects<20%

Fairvalue Otherincomeand DividendsandAvailforsale Equity G&L(sale)<20%

Fairvalue Netincome Dividends;Trading G&L(sale)20%-

Equity Notrecognized Proportionate50% investee’sinc>50%

Consolidate Notrecognized NotapplicableYESUNAccountingEnglish@200925Property,Plant,andEquipment(PP&E)PP&Einclude:land,building,structuresandequipmentmachinery,furnitureandtoolsTheyarenotheldforresaleTheyarelongtermandaresubjecttodepreciation(exceptland)TheyaretangibleYESUNAccountingEnglish@200926AcquisitionCostHistoricalcostisthebasisfordeterminingcostHistoricalcostincludes:theasset’scashorcashequivalentprice,andthecostofreadyingtheassetforuseCostsincurredafteracquisitionare:addedtoasset’scost,iftheyprovidefuture servicepotential,orexpensed,iftheydonotaddtoservicepotentialYESUNAccountingEnglish@200927CostssubsequenttoAcquisitionIfcostincurredincreasefuturebenefits,capitalizecostsIfcostsmaintainagivenlevelofservices,expensecostsCostsincurredafteracquisitioncanbe:additionsimprovementsandreplacementsrearrangementsandreinstallationrepairsYESUNAccountingEnglish@200928AcquisitionthroughleasingCapitalleaseOperatingleaseisoff-balancesheetfinancingYESUNAccountingEnglish@200929Exchangeofnonmonetaryexchange

Thebasicruleisthattheexchangemustbebasedon:thefairvalueoftheassetgivenup,orthefairvalueoftheassetreceivedwhicheverisclearlymoreevident.Therulesforgain/lossrecognitiondependuponwhethertheassetsexchangedare:

nonmonetaryormonetaryYESUNAccountingEnglish@200930ExchangeexampleAmbercompanyexchangesanumberoftrucksforlandfromBecktelcompany.Fairvalueoftrucks:$49,000.Bookvalueoftrucks: $42,000(Cost,$64,000;Accu.Depr,$22,000)CashpaidtoBecktel: $17,000RecordthepurchaseinAmber’sbooks.YESUNAccountingEnglish@200931AmberBecktelLand,FMV=$66,000Cash,$17,000plusTrucks,FMV=$49,000Amberrecognizesgain=FMVlessBookvalue=$7,000YESUNAccountingEnglish@200932Land Dr.$66,000Accu.Dep(Trucks) Dr.$22,000Trucks $64,000Cash $17,000Gainondisposal $7,000YESUNAccountingEnglish@200933Depreciation-ConceptDepreciationisameansofcostallocation.Itisnotamethodofvaluation.Depreciationinvolves:

allocatingthecostoftangibleassetstoexpense

inasystematicandrationalmanner

toperiodsexpectedtobenefitfromuseofassetsYESUNAccountingEnglish@200934FactorsintheDepreciationProcessQuestionstobeanswered:

Whatisthedepreciablebaseoftheasset?

Whatistheasset’susefullife?

Whatmethodofcostapportionmentisbestfor theassetinquestion?YESUNAccountingEnglish@200935DepreciableBaseDepreciablebaseistheamountsubjectto depreciation.Itisdeterminedas:OriginalcostoftheassetlessEstimatedsalvageordisposalvalueYESUNAccountingEnglish@200936EstimatedServiceLivesAnasset’sservicelifeandphysicallifearenotthesame.Assetsareretired(fromproductivelife)dueto:physicalfactors(suchascasualty),oreconomicfactors(suchasobsolescence)Economicfactorsinturninclude

Inadequacy(assetcannotmeetcurrentdemand)Supercession(byabetterasset)Obsolescence(otherfactors)YESUNAccountingEnglish@200937DepreciationMethodsDepreciationmethodscanbeclassifiedasfollows:FinancialaccountingDepreciationmethodsFinancialaccountingmethodsare:

straight-lineacceleratedmethods,orYESUNAccountingEnglish@200938DepreciationMethods:OverviewDepreciationMethodsActivitymethod1.DecliningBalance2.Sum-of-the-years’digitsFinancialAccountingDepreciationMethodsTaxDepreciationStraight-linemethodAcceleratedmethodsYESUNAccountingEnglish@200939DepreciationMethods:ExampleAmbercorporationbuysatruckonJanuary1,2000.Informationrelatingtothetruckisasfollows:

Cost,$34,000

Estimatedservicelife,5years(or60,000miles)

Salvagevalueendoffiveyearsoruse,$4,000

Actualmilesdriven:

20,000miles(in2000);15,000miles(in2001)

YESUNAccountingEnglish@200940Straight-linemethod1.Depreciablebase=$34,000less$4,000=$30,0002.Annualdepreciation=$30,000/5years=$6,000 3.DepreciationSchedule:(years1and2)Year Book Depreciation Accumulated Bookvalue (beg) Depreciation

endofyear1 $34,000$6,000 $6,000 $28,0002 $28,000$6,000 $12,000 $22,000YESUNAccountingEnglish@200941Activitymethod(unit=mile)1.Depreciablebase=$34,000less$4,000=$30,0002.Depreciationpermile=$30,000/60,000=$0.50 4.DepreciationSchedule:(years1and2)Year Book Depreciation Accumulated Bookvalue

(beg)

Depreciation

endofyear1 $34,000$10,000 $10,000 $24,0002 $24,000$7,500 $17,500 $16,5003.Depreciation(2000)=$0.50*20,000miles=$10,000YESUNAccountingEnglish@200942Sum-of-the-years’-digits(SYD)method1.Depreciablebase=$34,000less$4,000=$30,0002.SYDfraction=(1+2+3+4+5)=153.Depreciation(2000)=$30,000*(5/15)=$10,000Depreciation(2001)=$30,000*(4/15)=$8,000Depreciation(2002)=$30,000*(3/15)=$6,000Depreciation(2003)=$30,000*(2/15)=$4,000Depreciation(2004)=$30,000*(1/15)=$2,000DecreasingFractionsYESUNAccountingEnglish@200943Sum-of-the-years’-digits(SYD)method

4.DepreciationSchedule

Year Book Depreciation Accumulated Bookvalue

(beg)

Depreciation

endofyear1 $34,000$10,000 $10,000 $24,0002 $24,000$8,000 $18,000 $16,0003 $16,000$6,000 $24,000 $10,0004 $10,000$4,000 $28,000 $6,0005 $6,000$2,000 $30,000 $4,000YESUNAccountingEnglish@200944DoubleDecliningbalancemethod1.Rateofdepreciation=2*(1/5)=0.402.Depreciation(2000)=$34,000*0.40=$13,600Depreciation(2001)=$20,400*0.40=$8,160Depreciation(2002)=$12,240*0.40=$4,896Depreciation(2003)=$3,344/2=$1,672Depreciation(2004)=$3,344/2=$1,672Totaldepreciationtaken=$30,000YESUNAccountingEnglish@200945Doubledecliningbalancemethod3.DepreciationSchedule

Year Book Depreciation Accumulated Bookvalue

(beg)

Depreciation

endofyear1 $34,000$13,600 $13,600 $20,4002 $20,400$8,160 $21,760 $12,2403 $12,240$4,896 $26,656 $7,3444 $7,344$1,672 $28,328 $5,6725 $5,672$1,672 $30,000 $4,000YESUNAccountingEnglish@200946RevisionofDepreciationEstimatesDeterminationofdepreciationinvolves initialestimates(life,salvagevalue.)Whentheseestimatesarerevised,were- computedepreciation.Thesereviseddepreciationexpensesapplyprospectivelytotheremaininglifeof assetThesechangesdonotaffectpriorperiods.YESUNAccountingEnglish@200947RevisionofDepreciationEstimates:ExampleAmbercorporationbuysadepreciableassetonJanuary1,2000for$95,000.Estimatedlifewas20years.Estimatedsalvagevaluewas$5,000.OnJanuary1,2006,estimateswererevisedasfollows:

salvagevalue,$2,000estimatedlife:24years(years2000through2023)Determinedepreciationfor2006basedonstraight linemethodofdepreciation.YESUNAccountingEnglish@200948RevisionofDepreciationEstimates:ExampleAccumulateddepreciationtodateof revisionofestimates:

($95,000-$5,000)/20years=$4,500dep$4,500*6years=$27,000accumulateddepr.Amounttobedepreciated(years2006through 2023=18years)($95,000-$27,000-$2,000)/18years=$3,667(rounded)annualdepreciationYESUNAccountingEnglish@200949DispositionsofPP&EPlantassetsmaybe:retiredvoluntarily,ordisposedofbysale,exchange,involuntary conversionDepreciationisrecordeduptothedateofdisposalbeforedetermininggainorlossGainsorlossesfrominvoluntaryconversionareoftenreportedasgainorloss.YESUNAccountingEnglish@200950Depletion:TerminologyDepletionreferstothecostbasiswrite-offofnaturalresourcesNaturalresourcesarecharacterizedby:

completeremovaloftheasset,andreplacementoftheassetonlybyanactofnatureYESUNAccountingEnglish@200951AccountingforExplorationCostsExplorationcostsareusuallyexpensedasincurredThesecostsarecapitalizedwhen:theyaresubstantial,anduncertaintyexistsregardingfindingthenatural resourceTwocompetingapproachesareemployedinpracticetoaccountforexplorationcosts(nextslide)YESUNAccountingEnglish@200952AccountingforExplorationCostsThetwoapproachesare:Successfuleffortsapproach,andFullcostapproachUnderthesuccessfuleffortsconcept,onlyexplorationcostsofsuccessfulprojectsarecapitalized.Underthefullcostconcept,allcostsarecapitalized.Eitherapproachiscurrentlyacceptable.YESUNAccountingEnglish@200953TheylackphysicalexistenceTheyrepresententity’srightsandprivilegesTheyarenotfinancialinstrumentsTheyarelongterminnatureIntangibles:CharacteristicsYESUNAccountingEnglish@200954TangibleAssetsAsaPercentofAllAssetsYESUNAccountingEnglish@200955Intangiblesareeithergroupedorseparatelyidentifiedbasedonthefollowingfactors:Aretheassetsdevelopedinternally,oracquiredsinglyoringroups?Istheexpectedbenefitfromtheassetlimitedorindefinite?Aretherightstransferableoraretheyasubstantialpartofthebusiness?ClassificationofIntangiblesYESUNAccountingEnglish@200956IntangiblesPurchasedInternally-CreatedSpecificallyIdentifiableGoodwill-typeassetsSpecificallyIdentifiableGoodwill-typeassetsCapitalizeCapitalizeExpense,exceptdirectcostsExpenseValuationofIntangibleAssetsYESUNAccountingEnglish@200957Intangiblesarewrittenoffovertheirusefullives,wheretheassetshavedeterminableusefullives.Wheretheintangibleshaveindefiniteusefullives,theyarenotamortized.Acquiredintangiblesshouldnotbewrittenoffatacquisition.AmortizationofIntangibleAssetsYESUNAccountingEnglish@200958Marketing-related(i.e.,trademark,tradename).Customer-related(i.e.,customerlists,customerrelationships).Artistic-related(i.e.,copyrights).Contract-related(i.e.,franchise,licensesorpermits).Goodwill.Technology-related(i.e.,productpatent,processpatent).SpecificIntangibles:TypesYESUNAccountingEnglish@200959Trademarksandtradenamesarerenewableindefinitelybytheoriginaluserinperiodsof10yearseach.Costsofacquiredtrademarksortradenamesarecapitalized.Iftrademarksortradenamesaredevelopedbytheabusiness,alldirectcosts(exceptR&Dcosts)arecapitalized.Marketing-RelatedIntangibles:TrademarksandTradeNamesYESUNAccountingEnglish@200960Copyrightsaregrantedforlifeofthecreatorplus50years.Copyrightscanbesoldorassigned,butcannotberenewed.Copyrightsareamortizedovertheirusefullife.Costsofacquiringcopyrightsarecapitalized.Researchanddevelopmentcostsinvolvedareexpensedasincurred.Artistic-RelatedIntangibles:CopyrightsYESUNAccountingEnglish@200961Afranchiseisacontractualagreementunderwhich:Thefranchisorgrantsthefranchisee:therighttosellcertainproductsorservices,therighttousecertaintrademarksortradenames,ortherighttoperformcertainfunctions,withinacertaingeographicalarea.Contract-RelatedIntangibles:FranchisesandLicensesYESUNAccountingEnglish@200962Afranchisemaybeforalimitedtime,foranindefinitetimeperiod,orperpetual.Thecostofafranchise(foralimitedtime)isamortizedoverthefranchiseterm.Afranchise(foranunlimitedtime)iscarriedatcostandnotamortized.Annualpaymentsforafranchiseareexpensed.FranchisesandLicensesYESUNAccountingEnglish@200963Apatentgivesanexclusiverighttotheholderfor20years.Costsofpurchasingpatentsarecapitalized.Coststoresearchanddeveloppatentsareexpensedasincurred.Patentsareamortizedovertheshorterofthelegallife(20years)ortheirusefullives.Legalfeesincurredtosuccessfullydefendpaten