10 - Presentation Deck - ACC 211 PRINCIPLES OF ACCOUNTING...

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ACC 211: PRINCIPLES OF ACCOUNTING CHAPTER 10: Plant Assets, Natural Resources, and Intangible Assets PRESENTATION DECK Prepared by: Jill Mitchell, Assistant Professor, NOVA Reference: Weygandt, Jerry, Kieso, and Kimmel. Accounting Principles Unless noted, illustrations are from the referenced text.
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Chapter 10-2 1.1 Explain the concept of depreciation 1.2 Know the three factors affecting computation of depreciation 1.3 Compute depreciation using the straight line and units of activity methods 1.4 Know that Plant assets are reported at their book value.** Chapter 10: Plant Assets, Natural Resources, and Intangible Assets Course Competencies 2. Expenditures During Useful Life 1. Determining the Cost of Plant Assets 3. Plant Asset Disposals 2.1 Distinguish between ordinary repairs and additions/improve ments and how they are recorded 3.1 Know how to account for disposal of plant asset resulting from retirement or sale 4. Natural Resources 4.1 Know how to account for periodic depletion of natural resources using the units of activity method 5. Intangible Assets 5.1 Be able to define intangible assets and know the various types recognized in accounting
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Chapter 10-3 • “Used in operations” and not for resale. • Long-term in nature and usually depreciated. • Possess physical substance. Plant assets include land, land improvements, buildings, and equipment (machinery, furniture, tools). Major characteristics include: Referred to as property, plant, and equipment; plant and equipment; and fixed assets. 1.1 Explain the concept of depreciation Section 1 – Plant Assets
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Chapter 10-4 Includes all costs to acquire land and ready it for use. Costs typically include: (1) the purchase price; (2) closing costs, such as title and attorney’s fees; (3) real estate brokers’ commissions; (4) costs of grading, filling, draining, and clearing; (5) assumption of any liens, mortgages, or encumbrances on the property. 1.1 Explain the concept of depreciation Determining the Cost of Plant Assets - Land Dr. Land xx Cr. Cash xx *** The debit to LAND includes all necessary costs incurred to make land ready for its intended use.*** Note: does NOT depreciate
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Chapter 10-5 Includes all expenditures necessary to make the improvements ready for their intended use; structural improvements made to land. Examples are driveways, parking lots, fences, landscaping, and underground sprinklers. Limited useful lives. Expense (depreciate) the cost of land improvements over their useful lives. Determining the Cost of Plant Assets – Land Improvements Dr. Land Improvements xx Cr. Cash xx 1.1 Explain the concept of depreciation
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Chapter 10-6 Includes all costs related directly to purchase or construction. Purchase costs:
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10 - Presentation Deck - ACC 211 PRINCIPLES OF ACCOUNTING...

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