An adjusting entry to update the depreciation expense and accumulated

An adjusting entry to update the depreciation expense

This preview shows page 49 - 58 out of 58 pages.

An adjusting entry to update the depreciation expense and accumulated depreciation This is usually required because the disposal of an asset seldom occurs on the last day of the accounting period An entry to record the disposal of the asset Both the cost of the asset and any accumulated depreciation must be removed from the financial statements
Image of page 49

Subscribe to view the full document.

Disposal of PP&E Because the book value of the asset does not generally reflect is fair market value, a gain or loss may result from the sale of the asset How do we calculate the gain or loss from the sale of the asset? Assets Received upon disposal (e.g. cash or other asset) - Net book value Gain (loss) on sale of asset This gain or loss on sale of assets needs to be taken into consideration in calculating operating income on the income statement.
Image of page 50
Disposal of PP&E What is the journal entry to record the disposal of an asset? Cash XX Acc Dep XX Equipment XX Gain on Disposal XX Cash XX Acc Dep XX Equipment XX Loss on Disposal XX Involuntary conversions (due to fire, flood, or eminent domain) are recorded with similar journal entries
Image of page 51

Subscribe to view the full document.

Today’s Topic Overview of PP&E Acquisition of PP&E Interest Costs During Construction Valuation of PP&E Costs Subsequent to Acquisition Disposition of PP&E Agriculture Accounting
Image of page 52
Agriculture Accounting Agricultural activity - the management by an entity of the biological transformation and harvest of biological assets for sale or for conversion into agricultural produce or into additional biological assets Agricultural produce - the harvested produce of the entity's biological assets Biological asset - a living animal or plant Bearer biological assets Consumable biological assets A bearer plant is a living plant that: is used in the production or supply of agricultural produce is expected to bear produce for more than one period, and has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales
Image of page 53

Subscribe to view the full document.

Agricultural Activity Examples of agricultural activity: Raising livestock, fish or poultry Stud farms (for example, breeding horses or cattle) Forestry Cultivating vineyards, orchards or plantations Floriculture Examples of non-agricultural activity: Horses in game parks Animals in zoos Ocean fishing
Image of page 54
Biological Assets
Image of page 55

Subscribe to view the full document.

Recognition of biological assets Measured at fair value less costs to sell on initial recognition Changes in fair values subsequently recognized as gains/losses in Income Statement Applies to both biological assets and agricultural produce When fair value cannot be measured reliably: biological asset is measured at cost less any accumulated depreciation and any accumulated impairment losses until reliable fair value becomes available
Image of page 56
Recognition of bearer plants Initial measurement at cost Subsequent measurement at cost or revaluation model For cost model: Depreciation to be provided
Image of page 57

Subscribe to view the full document.

Image of page 58
  • Winter '18
  • jane smith

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes