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Unformatted text preview: from the franchisor. 33 Goodwill
Purchase Price > Fair Market Value of Net Assets Acquired Occurs when one company buys another company. Only purchased goodwill is an intangible asset. Is impairment tested and may be written down.
34 Is not amortized. 35 Summary of Accounting Rules for Long-Lived Assets
Stage Subject Acquisition Purchased Asset Use Repairs/maintenance Ordinary Extraordinary Depreciation/ amortization Limited life Tangible Assets Capitalize all related costs Intangible Assets Capitalize all related costs Expense related costs Capitalize related costs straight-line units-of-production declining-balance Do not depreciate land Write-down if necessary Not applicable Not applicable Typically use straight line only Unlimited life Impairment test Disposal Do not amortize Write-down if necessary Receive more (less) on disposal than book value Report gain or (loss) when . . . Receive more (less) on disposal than book value 36 37 38 39 40 41 Changes in Depreciation Estimates
Cedar Fair purchased equipment that cost Cedar Fair purchased equipment that cost $60,000,000 with an estimated useful life of 20 $60,000,000 with an estimated useful life of 20 years and an estimated salvage value of years and an estimated salvage value of $3,000,000. During year 5, Cedar Fair changed $3,000,000. During year 5, Cedar Fair changed the estimated useful life to 25 years and lowered the estimated useful life to 25 years and lowered the estimated salvage value to $2,400,000. the estimated salvage value to $2,400,000. Calculate depreciation expense for year 5 and Calculate depreciation expense for year 5 and thereafter using the straight-line method. thereafter using the straight-line method.
42 43 Summary You should be able to:
Define classify and explain the nature of long lived assets. Apply cost principle to acquisition of long-lived assets Use different depreciation methods to match revenue with expenses. Understand Impairment & disposition Account for Long lived Intangible assets Compute Fixed asset turnover ratios 44...
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This document was uploaded on 03/13/2014 for the course BUS 021 at UC Riverside.
- Spring '08
- Intangible Assets