Ch11(6th)Post - Investing Investing Activities Activities...

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Unformatted text preview: Investing Investing Activities Activities Chapter Chapter F11 F11 11 - 2 1. Identify types of long-term assets, their purposes, and the measurement basis companies use to record their assets. 2. Apply appropriate measurement rules to the purchase, depreciation, and disposal of plant assets. 3. Apply appropriate measurement rules to the purchase and use of natural resources. Objectives Objectives 11 - 3 4. Apply appropriate measurement rules to the purchase, valuation, and sale of long-term and short-term investments. 5. Explain accounting issues associated with intangible and other long-term assets. Objectives Objectives 11 - 4 Current assets: Cash $ 9,478 Accounts receivable 15,710 Inventories 38,211 Prepaid expenses 13,456 Total current assets $ 76,855 Long-term investments 66,743 Property, plant, and equipment $797,794 Less: Accumulated depreciation 139,172 Property, plant, and equipment (net) 658,622 Intangible assets 47,409 Other assets 22,212 Total assets $871,841 Types of Assets Types of Assets Obj - 1 11 - 5 Types of Assets Types of Assets Current assets are those that management expects to convert to cash or consume during the coming fiscal year. Obj - 1 11 - 6 Types of Assets Types of Assets Long-term assets provide benefits to a company that extend beyond the coming fiscal year or operating cycle, and usually are divided into four categories : 1. Long-term investments are investments in financial securities of other companies 2. Property, plant, and equipment includes investments in tangible assets that a company intends to use in the future to produce or sell its product Obj - 1 11 - 7 Types of Assets Types of Assets 1. Intangible assets are those that provide legal rights or benefits to a company, such as patents, copyrights, trademarks, and goodwill 2. Other assets include miscellaneous resources that are important to a particular company, such as long-term receivables and a building that the company is trying to sell Obj - 1 11 - 8 Plant Asset Cost Plant Asset Cost Amount paid for the asset Cost of transportation Site preparation Installation Construction necessary to make the asset usable for its intended purpose Obj - 2 11 - 9 Plant Asset Cost Plant Asset Cost On September 12, 2008, Favorite Cookie Company purchased a small parcel of property. The company paid $400,000 for the property, which included a building and office equipment. An appraiser determines that 70% of the cost should be allocated to the building, 20% to the land, and 10% to the equipment. Obj - 2 11 - 10 Plant Asset Cost Plant Asset Cost ASSETS = ASSETS = LIABILITIES LIABILITIES + OWNERS EQUITY + OWNERS EQUITY Date Accounts Cash Other Assets Contributed Capital Retained Earnings 9/12 Land 80,000 Building 280,000 Equipment 40,000 Cash-400,000 Obj - 2 11 - 11 Expenditures made to acquire new plant assets, extend the assets life, or enhance the value of an existing plant asset, are known as...
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This note was uploaded on 09/04/2008 for the course ACC 310F taught by Professor Verduzco during the Spring '07 term at University of Texas at Austin.

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Ch11(6th)Post - Investing Investing Activities Activities...

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