C1 Chapter 08

C1 Chapter 08 - 8-1Chapter 8Capital Assets:Property, Plant,...

Info iconThis preview shows pages 1–14. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 8-1Chapter 8Capital Assets:Property, Plant, and Equipment, Natural Resources,and IntangiblesFinancial Accounting 1stCanadian ed. by PNCS-B8-2Properties (Note4)$ 16,688Intangibles and other assets (Note5) 929Total$ 17,617CN 2004 Balance Sheet (excerpt)Book ValueAt Cost8-3Acquisition Cost of P,P&EAll costs necessary to acquire asset and prepare for intended usePurchasePrice-DiscountInstallationCostsTransportation ChargesDuty 8-4Group Asset PurchasesAllocate cost of lump-sum purchase based on fair market valuesCost$100,000$75,000$25,000AllocatedCostLand = $30,000Building = $90,000Fair MarketValue75%25%% ofMarketValue8-5Capitalization of InterestInterest can be included as part of the cost of an asset if:company constructs asset over time, andborrows money to finance construction8-6Depreciation of P,P & EMatch cost ofassetswith periodsbenefited12345678910111213141516171819202122232425262829303127Straight-LineUnits ofProductionAcceleratedMethodsvia8-7$9,0003-year lifeStraight-Line MethodAllocates cost of asset evenly over its useful life$3,000Year 1$3,000Year 2$3,000Year 38-8Units-of-Production MethodAllocate asset cost based on number of units produced over its useful lifedepreciation =per unit8-9Double-Declining-Balance MethodDouble the straight-line rate on a declining balance (book value)Accelerated method - higher amount of depreciation in early yearsStraight-lineRate8-10Depreciation ExampleOn January 1, Kemp Company purchases a machine for $20,000. The life of the machine is estimated at five years, after which it is expected to be sold for $2,000.8-11Depreciation ExampleCalculate Kemp's depreciation of the machine for years 1 - 5 using the straight-line, units-of-production and double-declining-balance depreciation methods. $20,000 cost - $2,000 residual value = $18,000 to be depreciated8-12Straight-Line DepreciationDepreciation = Cost - Residual ValueLife= $20,000 - $2,0005 years= $3,600$18,0005-year life$3,600Year 1$3,600Year 2$3,600Year 3$3,600Year 4$3,600Year 58-13Units-of-Production DepreciationKemps estimated machine production:...
View Full Document

Page1 / 45

C1 Chapter 08 - 8-1Chapter 8Capital Assets:Property, Plant,...

This preview shows document pages 1 - 14. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online