436Chapter10Plant Assets, NaturalResources, andIntangible AssetsAfter studying this chapter, you should beable to:1Describe how the cost principle appliesto plant assets.2Explain the concept of depreciation.3Compute periodic depreciation usingdifferent methods.4Describe the procedure for revisingperiodic depreciation.5Distinguish between revenue andcapital expenditures, and explain theentries for each.6Explain how to account for the disposalof a plant asset.7Compute periodic depletion of naturalresources.8Explain the basic issues related toaccounting for intangible assets.9Indicate how plant assets, naturalresources, and intangible assets are reported.STUDY OBJECTIVESThe NavigatoraDO IT!DO IT!Feature StoryHOW MUCH FOR A RIDE TO THE BEACH?It’s spring break. Your plane has landed, you’ve finally found your bags, andyou’re dying to hit the beach—but first you need a “vehicular unit” to getScan Study ObjectivesARead Feature StoryARead PreviewARead text and answerp. 442Ap. 449Ap. 452Ap. 457AWork Comprehensive p. 461Ap. 462AReview Summary of Study ObjectivesAAnswer Self-Study QuestionsAComplete AssignmentsAThe NavigatoraPDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
437you there. As you turnaway from baggage claimyou see a long row ofrental agency booths.Many are names you arefamiliar with—Hertz, Avis,and Budget. But a boothat the far end catches youreye—Rent-A-Wreck(www.rent-a-wreck.com).Now there’s a companymaking a clear statement!Any company that relieson equipment to generaterevenues must make deci-sions about what kind ofequipment to buy, how long to keep it, and how vigorously to maintain it.Rent-A-Wreck has decided to rent used rather than new cars and trucks. Itrents these vehicles across the United States, Europe, and Asia. While thebig-name agencies push vehicles with that “new car smell,” Rent-A-Wreckcompetes on price. The message is simple: Rent a used car and save somecash. It’s not a message that appeals to everyone. If you’re a marketingexecutive wanting to impress a big client, you probably don’t want to pullup in a Rent-A-Wreck car. But if you want to get from point A to point B forthe minimum cash per mile, then they are playing your tune. The company’smessage seems to be getting across to the right clientele. Revenues haveincreased significantly.When you rent a car from Rent-A-Wreck, you are renting from an independ-ent business person who has paid a “franchise fee” for the right to use theRent-A-Wreck name. In order to gain a franchise, he or she must meet finan-cial and other criteria, and must agree to run the rental agency according torules prescribed by Rent-A-Wreck. Some of these rules require that each fran-chise maintain its cars in a reasonable fashion. This ensures that, though youwon’t be cruising down Daytona Beach’s Atlantic Avenue in a Mercedes con-vertible, you can be reasonably assured that you won’t be calling a towtruck.
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