image.jpg - 12 Definition of depreciation & how to...

Unformatted text preview: 12) Definition of depreciation & how to calculate straight line: Depreciation is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use.cost-salvation value/usefil life in periods 13) Definition of depletion: The process of allocating the cost of a long-term tangible asset over its useful life. 14)What is obsolescence? Notable reduction in the utility of an inventory item or fixed asset. 15)Know the basics of a patent & the basics of intangible assets:-owner has exclusive right to manufacture and sell a patented item or use a process for 20 years. Intangible Assets: Nonphysical assets used in operations. Often provide exclusive rights or competitive advantages Can have limited or indefinite life. Recorded at cost when purchased. 16)Know about the sale of an asset :Update depreciation to the date of disposal. Journalize disposal by: Recording cash received (debit) or paid (credit). Recording a gain (credit) or loss(debit). Removin accumulated depreciation (debit). Removing the asset cost(credit). how to determine gain or loss on sale: If Cash > BV, record a gain (credit). If Cash < BV, record a loss (debit). If Cash = BV, no gain or loss. Chp 11 17)What does the payroll register include? gross pay, deductions, tax withholding, net pay 18)When is the W-2 required to be given to employees?annualy 19) Corporations are subject to income taxes; do they need to estimate for financial statements Yes on payable Chp 14 20)Requirement of sinking fund bonds. The issuer requires a specified portion of an issue each year. 21) Bond legal contract is called? mortgage 22)Know basics of serial bonds. Financial bonds that mature in installments over a period of time. 23)What is the carrying value of bonds at maturity? Carrying Value > Retirement Price = Gain Carrying Value < Retirement Price = Loss Chp 15 24) Corporation startup costs are called? old.. wha...
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