Chapter-7 - 1 ACCT 2001 Chapter 7 Omit Pg 327b 329m 337b...

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1 ACCT 2001 Chapter 7 Omit Pg. 327b – 329m 337b – End of Chapter Assets -Assets have value. -Expenses have been used up. -Match revenues and expenses to see how much money an asset has helped you earn. Plant Assets Machinery Equipment Furniture/Fixtures Land Land Improvements -When these plant assets are used up, or expire, you apply the theory of Depreciation, and use the adjusting entry above . -You cannot depreciate Land, even when it goes up or down in value. Purchase of Land -On the books, you can include, 1. Price of Land 2. Commission to Realtor 3. Back Taxes Due 4. Survey Fee 5. Demolition Fee Journal Entries During the life of a plant asset, we have to spend money to keep them up (say we pay cash). 1. Depreciation Expense 10 0 Accumulated Depreciation 100 Expense 10 0 Cas h 100
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2 2. GAAP Criteria 1. Does it add value to the asset? 2. Does it increase the life of the asset? -Ask these questions to determine which way in make the journal entry -Anything routine, like an oil change, you use the expense/cash method.
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