Ch10 - 436 Chapter 10 Plant Assets, Natural Resources, and...

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Unformatted text preview: 436 Chapter 10 Plant Assets, Natural Resources, and Intangible Assets After studying this chapter, you should be able to: 1 Describe how the cost principle applies to plant assets. 2 Explain the concept of depreciation. 3 Compute periodic depreciation using different methods. 4 Describe the procedure for revising periodic depreciation. 5 Distinguish between revenue and capital expenditures, and explain the entries for each. 6 Explain how to account for the disposal of a plant asset. 7 Compute periodic depletion of natural resources. 8 Explain the basic issues related to accounting for intangible assets. 9 Indicate how plant assets, natural resources, and intangible assets are reported. S T U D Y O B J E C T I V E S The Navigator a19 DO IT! DO IT! Feature Story HOW MUCH FOR A RIDE TO THE BEACH? It’s spring break. Your plane has landed, you’ve finally found your bags, and you’re dying to hit the beach—but first you need a “vehicular unit” to get Scan Study Objectives a73 Read Feature Story a73 Read Preview a73 Read text and answer p. 442 a73 p. 449 a73 p. 452 a73 p. 457 a73 Work Comprehensive p. 461 a73 p. 462 a73 Review Summary of Study Objectives a73 Answer Self-Study Questions a73 Complete Assignments a73 The Navigator a19 PDF Watermark Remover DEMO : Purchase from to remove the watermark 437 you there. As you turn away from baggage claim you see a long row of rental agency booths. Many are names you are familiar with— Hertz , Avis , and Budget . But a booth at the far end catches your eye— Rent-A-Wreck ( ). Now there’s a company making a clear statement! Any company that relies on equipment to generate revenues must make deci- sions about what kind of equipment 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. It rents these vehicles across the United States, Europe, and Asia. While the big-name agencies push vehicles with that “new car smell,” Rent-A-Wreck competes on price. The message is simple: Rent a used car and save some cash. It’s not a message that appeals to everyone. If you’re a marketing executive wanting to impress a big client, you probably don’t want to pull up in a Rent-A-Wreck car. But if you want to get from point A to point B for the minimum cash per mile, then they are playing your tune. The company’s message seems to be getting across to the right clientele. Revenues have increased 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 the Rent-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 to rules 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 you won’t be cruising down Daytona Beach’s Atlantic Avenue in a Mercedes con-...
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