ACCT 2000 Chapters 6

ACCT 2000 Chapters 6 - Chapter 6 Non Current Assets...

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Chapter 6 Non Current Assets - Property, Plant and Equipment - Other Assets Property, Plant and Equipment Long lives Tangible- physical substance Used in daily operations of business Include: Buildings Land Machinery 1) Cost? Furniture 2) Depreciation- all but Land must be Depreciated Equipment Cars and Trucks Land Improvement Property, Plant and Equipment Asset Cost “Rule of Thumb”-  any cost associated with getting the asset ready for its intended use is an  asset cost - Machinery 1. Purchase price 2. Sales Tax- debated to cost of asset 3. Delivery 4. Instillation - Land 1. Purchase Price 2. Attorney Fees- title search; prepare documents 3. Survey Fees 4. Appraisal 5. Grading and Leveling Cost 6. Demolition of Existing Structures - Land Improvement 1. Landscaping 2. Parking Lots 3. Sidewalks 4. Outdoor Lighting
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- Building 1. Construction Cost 2. Interest on “Construction Loan” 3. Insurance during Construction 4. Architectural Fees Depreciation - the cost allocation of property, plant and equipment assets (except land) to the  periods              Benefited from the use of the asset ≠ Decline in value = cost allocation – periods benefiting by the use of the asset Ex.       $25,000 cost of vehicle =   $5,000 a year depreciation 5 year life Auto 25,000 Cash 25,000 12/31/07 AJE Depreciation expense 5,000 Accumulated depreciation 5,000 As assets expire, expense their cost (every year an 5,000 AJE is needed for  depreciation) Depreciation expenses applies to all PPE except for land How do you determine Depreciation Expense? 12/31/07
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ACCT 2000 Chapters 6 - Chapter 6 Non Current Assets...

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