principles of accounting(会计学原理)chapter10(39p)

, 2009 The McGraw-Hill Companies, Inc.,All Rights Reserved,Click to edit Master text styles,Second level,Third level,McGraw-Hill/Irwin,Slide,*,Click to edit Master text styles,Second level,Third level,PLANT ASSETS, NATURAL RESOURCES, AND INTANGIBLES,Chapter 10,Called Property, Plant, & Equipment,PLANT ASSETS,Expected to Benefit Future Periods,Actively Used in Operations,Tangible in Nature,C 1,Decline in asset value over its useful life,Use,2,.,Allocate cost to periods,benefited.,3. Account for subsequent,expenditures.,Disposal,4. Record disposal.,PLANT ASSETS,Acquisition,1. Compute cost.,C 1,AcquisitionCost,Acquisition cost,excludes,financing charges andcash discounts.,All expenditures needed to prepare the asset for its intended use,Purchaseprice,COST DETERMINATION,P1,Land is,not,depreciable.,Purchaseprice,Real estate,commissions,Title insurance premiums,Delinquent,taxes,Surveyingfees,Title search and transfer fees,LAND,P1,LAND IMPROVEMENTS,Parking lots, driveways, fences, walks, shrubs, and lighting systems.,Depreciateover useful life of improvements.,P1,Cost of purchase or construction,Brokeragefees,Taxes,Title fees,Attorney fees,BUILDINGS,P1,Purchaseprice,Installing,assembling, andtesting,Insurance whilein transit,Taxes,Transportation,charges,MACHINERY AND EQUIPMENT,P1,LUMP-SUM ASSET PURCHASE,Oakley paid $90,000 cash to acquire a group of items consisting of land appraised at $30,000, land improvements appraised at $10,000, and a building appraised at $60,000. The $90,000 cost will be allocated on the basis of appraised values as shown:,The total cost of a combined purchase of land and building is separated on the basis of their,relative fair market values,.,P1,Depreciation is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use.,Cost,Allocation,AcquisitionCost,(Unused),Balance Sheet,(Used),Income Statement,Expense,DEPRECIATION,C2,FACTORS IN COMPUTING DEPRECIATION,The calculation of depreciation requires three amounts for each asset:,Cost,Salvage Value,Useful Life,C2,DEPRECIATION METHODS,Straight-line,Units-of-production,Declining-balance,Cost,$ 10,000,Salvage value,1,000,Depreciable cost,$ 9,000,Useful life,Accounting periods,5 years,Units inspected,36,000 units,Asset we will depreciate,P2,STRAIGHT-LINE METHOD,Cost - Salvage ValueUseful life,Depreciation,Expense for Period,=,Cost,$ 10,000,Salvage value,1,000,Depreciable cost,$ 9,000,Useful life,Accounting periods,5 years,Units inspected,36,000 units,$10,000 - $1,0005 years,= $1,800/year,P2,Balance Sheet Presentation,Machinery,$ 10,000,Less: accumulated depreciation,1,800,$ 8,200,P2,UNITS-OF-PRODUCTION METHOD,Step 2:,Depreciation,Expense,=,Depreciation,Per Unit,Number of Units Producedin the Period,Depreciation,Per Unit,=,Cost - Salvage Value,Total Units of Production,Step 1:,P2,UNITS-OF-PRODUCTION METHOD,Cost,$ 10,000,Salvage value,1,000,Depreciable cost,$ 9,000,Useful life,Accounting periods,5 years,Units inspected,36,000 units,Depreciation,Per Unit,=,Cost - Salvage Value,Total Units of Production,Step 1:,=,$9,00036,000,=,$025/unit,Step 2:,Depreciation,Expense,=,Depreciation,Per Unit,Number of Units Producedin the Period,= $025 7,000,= $1,750,Assume that 7,000 units were inspected during 2009. Depreciation would be calculated as follows:,P2,DOUBLE-DECLINING-BALANCE METHOD,Step 2:,Double-declining-balance rate,= 2 Straight-line rate = 2, 20% =,40%,Step 1:,Straight-linerate,=,100 %, Useful life = 100% 5 =,20%,Step 3:,Depreciationexpense,=,Double-declining-balance rate,Beginning periodbook value,40%, $10,000 =,$4,000,for 2009,P2,DOUBLE-DECLINING-BALANCE METHOD,Depreciation for the Period,End of Period,Beginning,Depreciation,Depreciation,Accumulated,Book,Year,Book Value,Expense,Expense,Depreciation,Value,Initial cost,$10,000,2009,$10,000,40%,$4,000,$4,000,6,000,2010,6,000,40%,2,400,6,400,3,600,2011,3,600,40%,1,440,7,840,2,160,2012,2,160,40%,864,8,704,1,296,2013,1,296,40%,296,*,9,000,1,000,* Year 2013 depreciation is $1,296 - $1000 = $296,C2,COMPARING DEPRECIATION METHODS,A1,PARTIAL-YEAR DEPRECIATION,When a plant asset is acquired during the year, depreciation is calculated for the fraction of the year the asset is owned.,Cost,$ 10,000,Salvage value,1,000,Depreciable cost,$ 9,000,Useful life,Accounting periods,5 years,Units inspected,36,000 units,Assume our machinery was purchased on October 1, 2009. Lets calculate depreciation expense for 2009, assuming we use straight-line depreciation,.,Depreciation = ($10,000 - $1,000) 5 = $1,800 for all 2009,Depreciation = $1,800 ,3,/,12,=,$450,C 3,So depreciationis an estimate.,Predicted salvage value,Predicteduseful life,CHANGE IN ESTIMATES FOR DEPRECIATION,Over the life of an asset, new information may come to light that indicates the original estimates were inaccurate.,C 3,CHANGE IN ESTIMATES FOR DEPRECIATION,Lets return to our machinery and assume that at the beginning of the assets third year, its book value is $6,400 ($10,000 cost less $3,600 accumulated depreciation using straight-line depreciation). At that time, it is determined that the machinery will have a remaining useful life of 4 years (instead of the previous estimate of 3 years), and the estimated salvage value will change from $1,000 to $400.,Book value at date of change,Salvage value at date of change,Remaining useful lifeat date of change,$6,400 $4004 years,=,=,$1,500/year,C 3,REPORTING DEPRECIATION,Dale Jarrett Racing Adventure,Office furniture and equipment,$ 45,386,Shop and track equipment,123,378,Race vehicles and other,775,363,Property and equipment, gross,944,127,Less: accumulated depreciation,715,435,Property and equipment, net,$ 228,692,C 3,ADDITIONAL EXPENDITURES,If the amounts involved are not material, most companies expense the item.,P3,REVENUE AND CAPITAL EXPENDITURES,P3,Recording cashreceived (debit)or paid (credit).,Removing accumulateddepreciation (debit).,Update depreciation to the date of disposal.,Journalize disposal by:,Removing the asset cost (credit).,Recording again (credit),or loss (debit).,DISPOSALS OF PLANT ASSETS,P4,Update depreciation to the date of disposal.,Journalize disposal by:,If Cash BV, record a gain (credit).,If Cash BV, record a gain (credit).,If Cash BV, record a loss (debit).,If Cash = BV, no gain or loss.,Next, we calculate the gain or loss on the sale:,Finally, we record the sale:,P3,Total cost,including exploration anddevelopment,is charged todepletion expenseover periodsbenefited.,Extracted fromthe naturalenvironmentand reportedat cost lessaccumulated,depletion,.,NATURAL RESOURCES,Examples: oil, coal, gold,P5,COST DETERMINATION AND DEPLETION,Step 2:,Depletion,Expense,=,Depletion,Per Unit,Units Extracted and Sold in Period,Depletion,Per Unit,=,Cost - Salvage Value,Total Units of Capacity,Step 1:,P5,DEPLETION OF NATURAL RESOURCES,Consider mineral deposits with an estimated 250,000 tons of available ore. It is purchased for $500,000, and we expect zero salvage value.,Depletionper Unit,=,$500,000 - $0250,000 tons,=,$2 per ton,If the company extracts and sells 85,000 tons of ore during the year:,85,000 tons $2 per ton = $170,000 depletion expense,P5,PLANT ASSETS USED IN EXTRACTING,Specialized plant assets may be required to extract the natural resource.,These assets are recorded in a separate account and depreciated.,P5,Noncurrent assetswithout physicalsubstance.,Useful life isoften difficultto determine.,Usually acquired for operational use.,IntangibleAssets,Often provideexclusive rightsor privileges.,INTANGIBLE ASSETS,P6,COST DETERMINATION AND AMORTIZATION,Patents,Copyrights,Leaseholds,Leasehold Improvements,Franchises & Licenses,Goodwill,Trademarks & Trade Names,Record at current cash equivalent cost, including purchase price, legal fees, and filing fees.,P6,Provides information about a companys efficiency in using its assets.,Total Asset,Turnover,=,Net Sales,Average Total Assets,TOTAL ASSET TURNOVER,Company,$ in millions,2006,2005,2004,2003,Molson Coors,Net sales,$ 5,845,$ 5,507,$ 4,306,$ 4,000,Average total assets,11,701,8,228,4,551,4,392,Total asset turnover,0.50,0.67,0.95,0.91,Anheuser-Busch,Net sales,$ 15,717,$ 15,036,$ 14,934,$ 14,147,Average total assets,16,466,16,362,15,431,14,405,Total asset turnover,.95,.92,.97,.98,A2,END OF CHAPTER 10,