Chapter_10 - 10 Fixed Assets and Intangible Assets Student...

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10 Fixed Assets and Intangible Assets Student Version
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10-2 Describe, classify, and account for the cost of fixed assets. 1 10-2
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10-3 Fixed assets have the following characteristics: 1. They exist physically and, thus, are tangible assets. 2. They are owned and used by the company in its normal operations. 3. They are not offered for sale as part of normal operations. 1
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10-4 1 Classifying Costs Exhibit 2
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10-5 1 Costs of Acquiring Fixed Assets Exhibit 3 (continued)
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10-6 1 Costs of Acquiring Fixed Assets (continued) Exhibit 3 (continued)
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10-7 1 Costs of Acquiring Fixed Assets (continued) Exhibit 3 (continued)
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10-8 1 Costs of Acquiring Fixed Assets (continued) Exhibit 3
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10-9 Cost of Acquiring Fixed Assets Excludes : 1. Vandalism These costs are expenses. 2. Mistakes in installation 4. Damage during unpacking and installing 3. Uninsured theft 5. Fines for not obtaining proper permits from government agencies 1
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10-10 Capital and Revenue Expenditures 1
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10-11 2 10-11 Compute depreciation, using the following methods: straight-line method, units-of-production method, and double-declining balance method.
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10-12 Over time, fixed assets such as equipment, buildings, and land improvements lose their ability to provide services. The periodic recording of the cost of fixed assets to expense is called depreciation . 2 Depreciation
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10-13 The expected useful life of a fixed asset is estimated at the time the asset is placed into service. The residual value of a fixed asset at the end of its useful life is estimated at the time the asset is placed into service. 2 Residual Value
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10-14 Straight-Line Method The straight-line method provides for the same amount of depreciation expense for each year of the asset’s useful life. Annual depreciation Cost – estimated residual value Estimated life = 2
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10-15 A depreciable asset cost $24,000. Its estimated residual value is $2,000 and its estimated useful life is five years. Annual depreciation Cost – estimated residual value Estimated life = Annual depreciation $24,000 – $2,000 5 years expected useful life = Annual depreciation = $4,400 2
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10-16 If the preceding equipment was purchased and placed into service on October 1, the depreciation would be $1,100, computed as follows: $4,400 × 3/12 = $1,100 2
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10-17 Units-of-Production Method The units-of-production method provides for the same amount of depreciation
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This note was uploaded on 03/26/2012 for the course ACCOUNTING 1A,1B,1C taught by Professor Spinozzi during the Summer '10 term at DeAnza College.

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Chapter_10 - 10 Fixed Assets and Intangible Assets Student...

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