acct final exam SG from book

acct final exam SG from book - Ch. 9 Notes from book...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Ch. 9 Notes from book Long-term Assets Property, Plant and Equipment/Plant asset Land Buildings Delivery Equipment Furniture Cost includes the purchase price of the asset and the costs incurred in designing and constructing the asset Intangible Assets Goodwill Patents Copyrights Cost of Land Includes The cash purchase price Closing cost (title and attorneys fees) Real estate brokers commission Accrued property taxes and other liens assumed by the purchaser Cost of buys a Building Includes Purchase Price Closing Costs (Attorneys fees, title insurance, etc.) Real estate brokers commission Cost of Equipment Includes Assets Used in Operations (ex: Store checkout counters, office furniture, factory machinery, delivery trucks, and airplanes) Along with expenditures required in assembling, installing and testing the unit Depreciation An example of the use of estimation in the accounting process Land Improvements Buildings Equipment 3 Factors affecting the computation of Depreciation Cost Useful life An estimate of the expected productive life, aka service life, of the asset Salvage value An estimate of the assets value at the end of its useful life Accumulated Depreciation
Background image of page 1

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

View Full DocumentRight Arrow Icon
Represents the total amount of the assets cost that the company has charged to expense Not a cash fund Depreciation Methods Straight-Line Companies expense the same amount of depreciation for each year of the assets useful life Need to determine depreciable cost It is the cost of the asset – its salvage value Represents the total amount subject to depreciation To determine annual depreciation expense Depreciable cost/assets useful life Annual rate of depreciation/annual straight-line rate It applies the percentage rate to the depreciable cost of the asset Easy to apply Matches expenses w/ revenues when the benefit received from the asset is reasonably uniform throughout the service life Units-Of-Activity Useful life is expressed in terms of the total units of production or use expected from the asset Ideally suited to factory machinery Must estimate the total unites of activity for the entire useful life, & then divide these units into depreciable cost Resulting number represents the depreciation cost per unit The depreciation cost per unit is then applied to the units of activity during the year to determine the annual depreciation expense Often difficult for companies to reasonably estimate total activity Double-Declining-Balance Method A common declining-balance rate is double the straight-line rate
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/02/2012 for the course ACCT 2001 taught by Professor Lowe during the Spring '08 term at LSU.

Page1 / 7

acct final exam SG from book - Ch. 9 Notes from book...

This preview shows document pages 1 - 3. Sign up to view the full document.

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