Professional Documents
Culture Documents
Assets
Chapter 9
T a n g i b l e P l I a n n t at n g i b l e N a t u r a l
A s s e t s A s s e t s R e s o u r c e
L o n
g - t e r Nm o n c u r r e n S t ia t es ss e a t cs q u
a s s e t s h a wv i in t hg n o p h e y x s t r i ca ac lt i n g
p h y s i c a l s u b s s u t ab ns tc a e n . c e r . e s o u r c e
L a n d ,
b u i Pl d a i nt e g n s t , s , c o pO y i rl i gr e h s t es r, v
e q u i p m e n t t r, a d e m a r k t s i m, b e r , o
f u r n i t u r e , ff ri xa t n u c r eh si s . e s , g m o o i n d e w r ai l l l . s
9-2
Accountable Events in the
Lives of Plant Assets
Acquisition.
Allocation of the acquisition
cost to expense over the
asset’s useful life
(depreciation).
Sale or disposal.
9-3
Acquisition of Plant Assets
Asset
Cost = price
+
Reasonable and
necessary costs . . .
......for
forgetting
getting ......for
forgetting
getting
the
theasset
assetto
tothe
the the
theasset
asset ready
ready
desired
desired location.
location. for
for use.
use.
9-4
Capital Expenditures and
Revenue Expenditures
Capital Revenue
Expenditure Expenditure
9-5
Depreciation
The allocation of the cost of a plant asset to
expense in the periods in which services are
received from the asset.
Balance
BalanceSheet
Sheet
Cost of Assets:
Assets:
plant Plant
Plantand
and
assets equipment
equipment
9-7
Straight-Line Depreciation
9-8
Declining-Balance Method
Depreciation in the early years of an asset’s
estimated useful life is higher than in later years.
The
The double-declining
double-declining balance
balance depreciation
depreciation
rate
rate is
is 200%
200% of
of the
the straight-line
straight-line depreciation
depreciation
rate
rate of
of (1÷Useful
(1÷Useful Life).
Life).
9-9
Revising Depreciation
Rates
Predicted Predicted
salvage value useful life
So depreciation
is an estimate.
IfIf the
the cost
cost of
of an
an asset
asset
cannot
cannot be be recovered
recovered
through
through future
future use
use oror
sale,
sale, thethe asset
asset should
should
be
be written
written down
down toto its
its
net
net realizable
realizable value.
value.
9-11
Disposal of Plant and
Equipment
Update depreciation
to the date of disposal.
9-12
Disposal of Plant and
Equipment
If Cash > BV, record a gain (credit).
If Cash < BV, record a loss (debit).
If Cash = BV, no gain or loss.
9-13
Intangible Assets
Noncurrent assets Often provide
without physical exclusive rights
substance. or privileges.
Characteristics
9-14
Intangible Assets
Record at
Patents
current cash
Copyrights
equivalent cost,
Leaseholds
including
Leasehold
purchase price,
Improvements
legal fees, and
Goodwill
filing fees.
Trademarks and
Trade Names
9-15
Depletion of Natural
Resources
Depletion is calculated using the
units-of-production method.
9-16
End of Chapter 9
9-17