BMGT 220 Chapter 09

BMGT 220 Chapter 09 - Financial Accounting, Seventh Edition...

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon
Slide 9-1 Plant Assets, Natural Resources, and Intangible Assets Financial Accounting, Seventh Edition Chapter 9
Background image of page 1

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

View Full DocumentRight Arrow Icon
Slide 9-2 “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: Section 1 – Plant Assets Referred to as property, plant, and equipment; plant and equipment; and fixed assets.
Background image of page 2
Slide 9-3 Depreciation is the process of allocating the cost of a plant asset to expense in the accounting periods in a systematic and rational manner benefiting from its use. Cost Allocation Acquisition Cost (Unused) Balance Sheet (Used) Income Statement Expense Depreciation
Background image of page 3

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

View Full DocumentRight Arrow Icon
Slide 9-4 Factors in Computing Depreciation Actual Cost Depreciation Estimated Useful Life Estimated Salvage Value
Background image of page 4
Slide 9-5 Objective is to select the method that best measures an asset’s contribution to revenue over its useful life. Examples include: Depreciation Methods (1) Straight-line method. (2) Units-of-Activity method. (3) Declining-balance method. Depreciation
Background image of page 5

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

View Full DocumentRight Arrow Icon
Slide 9-6 On January 1, 2011, an equipment was purchased for  $50,000 cash.  The equipment has an estimated useful  life of 5 years and an estimated salvage value of  $5,000. Record the journal entry for Depreciation on  December 31, 2011. Cost - Salvage Value Useful life in periods Depreciation Expense for Period = Straight Line Depreciation Method
Background image of page 6
Slide 9-7 Cost - Salvage Value Useful life in periods Depreciation Expense for Period = December 31, 2010: Depreciation expense . . . . . . . . . . . . . . . . .9,000 Accumulated Depreciation . . . . . . . . . . . . . . 9,000 Straight Line Depreciation Method
Background image of page 7

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

View Full DocumentRight Arrow Icon
Slide 9-8 Straight Line Depreciation Method Depreciation Accumulated Expense Depreciation Accumulated Book Year (debit) (credit) Depreciation Value 50,000 $ 2011 9,000 $ 9,000 $ 9,000 $ 41,000 2012 9,000 9,000 18,000 32,000 2013 9,000 9,000 27,000 23,000 2014 9,000 9,000 36,000 14,000 2015 9,000 9,000 45,000 5,000 45,000 $ 45,000 $
Background image of page 8
Slide 9-9 Depreciation Per Unit = Cost - Salvage Value Total Units of Production Step 1: Depreciation Expense = Depreciation Per Unit × Number of Units Produced in the Period Step 2: Units-of-Activity Depreciation Method
Background image of page 9

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

View Full DocumentRight Arrow Icon
Slide 9-10 On January 1, 2011, equipment was purchased for $50,000 cash. The equipment is expected to produce 100,000 units during its useful life and has an estimated salvage value of $5,000. If 22,000 units were produced in 2011, what is the amount of depreciation expense? Units-of-Activity Depreciation Method
Background image of page 10
Slide 9-11 Units-of-Activity Depreciation Method
Background image of page 11

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

View Full DocumentRight Arrow Icon
Slide 9-12 Units-of-Activity Depreciation Method Depreciation Accumulated Book Year Units Expense Depreciation Value 50,000 $ 2011 22,000 9,900 $ 9,900 $ 40,100 2012 28,000 12,600 22,500 27,500 2013 - - 22,500 27,500 2014 32,000 14,400 36,900 13,100 2015 18,000 8,100 45,000 5,000 100,000 45,000 $
Background image of page 12
Image of page 13
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/04/2011 for the course BMGT 220 taught by Professor Bulmash during the Fall '08 term at Maryland.

Page1 / 48

BMGT 220 Chapter 09 - Financial Accounting, Seventh Edition...

This preview shows document pages 1 - 13. Sign up to view the full document.

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