SOLUTIONS TO BRIEF EXERCISES
|
|
- Melvin Jenkins
- 7 years ago
- Views:
Transcription
1 SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 10-1 All of the expenditures should be included in the cost of the land. Therefore, the cost of the land is $61,000, or ($50,000 + $3,000 + $2,500 + $2,000 + $3,500). BRIEF EXERCISE 10-2 The cost of the truck is $32,500 (cash price $30,000 + sales tax $2,100 + painting and lettering $400). The expenditures for insurance and motor vehicle license should not be added to the cost of the truck. BRIEF EXERCISE 10-3 Depreciable cost of $32,000, or ($38,000 $6,000). With a four-year useful life, annual depreciation is $8,000, or ($32,000 4). Under the straight-line method, depreciation is the same each year. Thus, depreciation is $8,000 for both the first and second years. BRIEF EXERCISE 10-4 It is likely that management requested this accounting treatment to boost reported net income. Land is not depreciated; thus, by reporting land at $120,000 above its actual value the company increased yearly income by $8,000, $120,000 or the reduction in depreciation expense. This practice is not ethical 15 years because management is knowingly misstating asset values. BRIEF EXERCISE 10-5 The declining balance rate is 50%, or (25% X 2) and this rate is applied to book value at the beginning of the year. The computations are: Year 1 Year 2 Book Value X Rate = Depreciation $38,000 ($38,000 $19,000) 50% 50% $19,000 $ 9,500
2 BRIEF EXERCISE 10-6 The depreciation cost per unit is 26 cents per mile computed as follows: Depreciable cost ($39,500 $500) 150,000 = $.26 Year 1 30,000 miles X $.26 = $7,800 Year 2 20,000 miles X $.26 = $5,200 BRIEF EXERCISE 10-7 Book value, 1/1/14... $23,000 Less: Salvage value... 2,000 Depreciable cost... $21,000 Remaining useful life... 4 years Revised annual depreciation ($21,000 4)... $ 5,250 BRIEF EXERCISE Maintenance and Repairs Expense Cash Equipment Cash BRIEF EXERCISE 10-9 (a) Accumulated Depreciation Equipment... 41,000 Equipment... 41,000 (b) Accumulated Depreciation Equipment... 37,000 Loss on Disposal of Plant Assets... 4,000 Equipment... 41,000
3 BRIEF EXERCISE 10-9 (Continued) Cost of equipment $41,000 Less accumulated depreciation 37,000 Book value at date of disposal 4,000 Proceeds from sale 0 Loss on disposal $ 4,000 BRIEF EXERCISE (a) Depreciation Expense... 5,250 Accumulated Depreciation Equipment... 5,250 (b) Cash... 18,000 Accumulated Depreciation Equipment... 47,250 Loss on Disposal of Plant Assets... 6,750 Equipment... 72,000 Cost of equipment $72,000 Less: Accumulated depreciation 47,250* Book value at date of disposal 24,750 Proceeds from sale 18,000 Loss on disposal $ 6,750 *$42,000 + $5,250 BRIEF EXERCISE (a) Depletion cost per unit = $7,000,000 35,000,000 = $.20 depletion cost per ton $.20 X 5,000,000 = $1,000,000 Depletion Expense... 1,000,000 Accumulated Depletion... 1,000,000 (b) Ore mine... $7,000,000 Less: Accumulated depletion... 1,000,000 $6,000,000
4 BRIEF EXERCISE (a) Amortization Expense ($140,000 10)... 14,000 Patents... 14,000 (b) Intangible Assets Patents... $126,000 BRIEF EXERCISE DENT COMPANY Balance Sheet (partial) December 31, 2014 Property, plant, and equipment Coal mine... $ 500,000 Less: Accumulated depletion ,000 $392,000 Buildings... 1,100,000 Less: Accumulated depreciation buildings , ,000 Total property, plant, and equipment... $892,000 Intangible assets Goodwill ,000 BRIEF EXERCISE $63.4 $44.1+ $ = 1.43 times PROBLEM 10-2A (a) Year Computation Accumulated Depreciation 12/ BUS 1 $ 90,000 X 20% = $18,000 $ 90,000 X 20% = $18,000 $18,000 36,000
5 2014 $ 90,000 X 20% = $18,000 54, BUS 2 $110,000 X 50% = $55,000 $ 55,000 X 50% = $27,500 $ 27,500 X 50% = $13,750 BUS 3 24,000 miles X $.70* = $16,800 34,000 miles X $.70* = $23,800 $55,000 82,500 96,250 $16,800 40,600 *$84, ,000 miles = $.70 per mile. (b) Year Computation Expense BUS 2 (1) 2012 $110,000 X 50% X 9/12 = $41,250 $41,250 (2) 2013 $68,750 X 50% = $34,375 $34,375
6 PROBLEM 10-5A (a) Apr. 1 Land... 2,130,000 Cash... 2,130,000 May 1 Depreciation Expense... 25,000 Accumulated Depreciation Equipment ($750,000 X 1/10 X 4/12)... 25,000 1 Cash ,000 Accumulated Depreciation Equipment ,000 Equipment ,000 Gain on Disposal of Plant Assets... 25,000 Cost $750,000 Accum. depreciation equipment 325,000 [($750,000 X 1/10 X 4) + $25,000] Book value 425,000 Cash proceeds 450,000 Gain on disposal $ 25,000 June 1 Cash... 1,500,000 Land ,000 Gain on Disposal of Plant Assets... 1,100,000 July 1 Equipment... 2,500,000 Cash... 2,500,000 Dec. 31 Depreciation Expense... 50,000 Accumulated Depreciation Equipment ($500,000 X 1/10)... 50, Accumulated Depreciation Equipment ,000 Equipment ,000
7 PROBLEM 10-5A (Continued) Cost $500,000 Accum. depreciation equipment 500,000 ($500,000 X 1/10 X 10) Book value $ 0 (b) Dec. 31 Depreciation Expense ,000 Accumulated Depreciation Buildings ,000 ($28,500,000 X 1/50) 31 Depreciation Expense... 4,800,000 Accumulated Depreciation Equipment... 4,800,000 ($46,750,000* X 1/10) $4,675,000 [($2,500,000 X 1/10) X 6/12] 125,000 $4,800,000 *($48,000,000 $750,000 $500,000) (c) GRAND COMPANY Partial Balance Sheet December 31, 2015 Plant Assets* Land... $ 5,730,000 Buildings... $28,500,000 Less: Accumulated depreciation buildings... 12,670,000 15,830,000 Equipment... 49,250,000 Less: Accumulated depreciation equipment... 9,050,000 40,200,000 Total plant assets... $61,760,000 *See T-accounts which follow. PROBLEM 10-5A (Continued) Land Bal. 4,000,000 June 1 400,000 Apr. 1 2,130,000
8 Bal. 5,730,000 Buildings Bal. 28,500,000 Bal. 28,500,000 Accumulated Depreciation Buildings Bal. 12,100,000 Dec. 31 adj. 570,000 Bal. 12,670,000 Equipment Bal. 48,000,000 May 1 750,000 July 1 2,500,000 Dec ,000 Bal. 49,250,000 Accumulated Depreciation Equipment May 1 325,000 Bal. 5,000,000 Dec ,000 May 1 25,000 Dec ,000 Dec. 31 adj. 4,800,000 Bal. 9,050,000 CHAPTER REVIEW Plant Assets 1. (L.O. 1) Plant assets are resources that have a physical substance (a definite size and shape), are used in the operations of a business and are not intended for sale to customers. They are also called property, plant, and equipment; plant and equipment; or fixed assets. Cost of Plant Assets 2. Plant assets are recorded at cost in accordance with the historical cost principle. Cost consists of all expenditures necessary to (1) acquire the asset, and (2) make it ready for its intended use. 3. The cost of land includes the cash purchase price, closing costs such as title and attorney s fees, real estate broker s commission, and accrued property taxes and other liens on the land assumed by the purchaser. All necessary costs incurred in making land ready for its intended use are debited to the Land Account.
9 4. Land improvements are structural additions made to land, such as driveways, parking lots, fences, landscaping, and underground sprinklers. The cost of land improvements includes all expenditures needed to make the improvements ready for their intended use. 5. The cost of buildings includes all necessary costs related to the purchase or construction of a building: a. When a building is purchased, such costs include the purchase price, closing costs, and real estate broker s commission. b. Costs to make the building ready for its intended use include expenditures for remodeling and replacing or repairing the roof, floors, wiring, and plumbing. c. When a new building is constructed, cost consists of the contract price plus payments for architects fees, building permits, interest payments during construction, and excavation costs. 6. The cost of equipment consists of the cash purchase price, sales taxes, freight charges, and insurance paid by the purchaser during transit. Cost includes all expenditures required in assembling, installing, and testing the unit. Recurring costs such as licenses and insurance are expensed as incurred. Depreciation 7. (L.O. 2) Depreciation is the process of allocating to expense the cost of a plant asset over its useful (service) life in a rational and systematic manner. a. The cost allocation is designed to provide for the proper matching of expenses with revenues in accordance with the expense recognition principle. b. During an asset s life, its usefulness may decline because of wear and tear or obsolescence. c. Recognition of depreciation does not result in the accumulation of cash for the replacement of the asset. 8. Three factors that affect the computation of depreciation are (1) cost, (2) useful life, and (3) salvage value.
10 9. Three methods of recognizing depreciation are (a) straight-line, (b) units-of-activity, and (c) declining-balance. a. Each method is acceptable under generally accepted accounting principles. b. Management selects the method it believes to be appropriate. c. Once a method is chosen, it should be applied consistently. Straight-Line Method 10. Under the straight-line method depreciation is the same for each year of the asset s useful life. a. The formula for computing annual depreciation expense is: Depreciable Cost Useful Life (in years) = Depreciation Expense b. To illustrate the computation, assume that the Benson Company purchased a delivery truck for $11,000 on January 1 with an estimated salvage value of $1,000 at the end of its four-year service life. Annual depreciation is $2,500 [($11,000 $1,000 4)]. c. The straight-line method predominates in practice. d. This method is simple to apply and it matches expenses and revenues appropriately when the use of the asset is reasonably uniform throughout the service life. Units-of-Activity Method 11. Under the units-of-activity method, service life is expressed in terms of the total units of production or expected use from the asset, rather than time. a. The formulas for computing depreciation expense are: (1) Depreciable Cost Total Units of Activity = Depreciable Cost per Unit (2) Depreciable Cost per Unit X Units of Activity During the Year = Depreciation Expense b. To illustrate the computation, assume that Benson Company expects to drive the truck purchased in (10b) above for 100,000 miles and that 30,000 miles are driven in the first year. Depreciation for the first year is $3,000. (1) $10, ,000 = $.10 per mile. (2) $.10 X 30,000 = $3,000. c. In using this method, it is often difficult to make a reasonable estimate of total activity. d. When the productivity of an asset varies significantly from one period to another, this method results in the best matching of expenses with revenues.
11 Declining-Balance Method 12. The declining-balance method produces a decreasing annual depreciation expense over the useful life of the asset. a. The formula for computing depreciation expense is: Book Value at Beginning of Year X Declining-Balance Rate = Depreciation Expense b. To illustrate the computation, assume that Benson Company uses a declining-balance rate that is double the straight-line rate of 25%. Depreciation in the first year is $5,500 ($11,000 X 50%). c. Under this method, the depreciation rate remains constant from year to year, but the book value to which the rate is applied declines each year. d. This method is compatible with the expense recognition principle because the higher depreciation in early years is matched with the higher benefits received in these years. 13. Taxpayers must use on their tax returns either the straight-line method or a special accelerated depreciation method called the Modified Accelerated Cost Recovery System (MACRS). Revising Periodic Depreciation 14. If wear and tear or obsolescence indicate that annual depreciation is inadequate or excessive, a change in the periodic amount should be made. a. When a change is made, (1) there is no correction of previously recorded depreciation expense, and (2) depreciation expense for current and future years is revised. b. To determine the new annual depreciation expense, the depreciable cost at the time of the revision is divided by the remaining useful life. Expenditures During Useful Life 15. (L.O. 3) Ordinary repairs are expenditures to maintain the operating efficiency and expected productive life of the plant asset. They are debited to Maintenance and Repairs Expense as incurred and are often referred to as revenue expenditures. 16. Additions and improvements are costs incurred to increase the operating efficiency, productive capacity, or expected useful life of the plant asset. These expenditures are usually material in amount and occur infrequently during the period of ownership. 17. Capital expenditures increase the company s investment in productive facilities. These expenditures include additions and improvements. Plant Asset Disposals 18. (L.O. 4) Plant assets may be disposed of by (a) retirement, (b) sale, or (c) exchange. 19. At the time of disposal, it is necessary to determine the book value of the plant asset. a. If the disposal occurs during the year, depreciation for the fraction of the year to the date of disposal must be recorded. b. The book value is then eliminated by debiting the Accumulated Depreciation account for the total depreciation to the date of disposal and crediting the asset account for the cost of the asset.
12 Retirement of Plant Assets 20. In accounting for a disposal by retirement, a. if the asset is fully depreciated, the entry is a debit to Accumulated Depreciation and a credit to the plant asset account. b. if the asset is retired before it is fully depreciated and no scrap or salvage value is received, a loss on disposal of plant assets occurs. c. the loss on disposal of plant assets is reported in the Other expenses and losses section of the income statement. Sale of Plant Assets 21. In a disposal by sale, the book value of the asset is compared with the proceeds received from the sale. a. If the proceeds of the sale exceed the book value, a gain on disposal of plant assets occurs which is reported in the Other revenues and gains section of the income statement. b. If the proceeds of the sale are less than the book value of the asset, a loss on disposal of plant assets occurs which is reported in the Other expenses and losses section of the income statement. Natural Resources 22. (L.O. 5) Natural resources consist of standing timber and underground deposits of oil, gas, and minerals. These assets are frequently called wasting assets. Acquisition Cost 23. The acquisition cost of a natural resource is the price needed to acquire the resource and prepare it for its intended use. Depletion 24. Depletion is the systematic write-off of the cost of natural resources. The units-of-activity method is generally used to compute depletion because periodic depletion is generally a function of the units extracted during the year. The formulas for computing depletion expense are: a. Total Cost minus Salvage Value Total Estimated Units = Depletion Cost per Unit. b. Depletion Cost per Unit X Number of Units Extracted and Sold = Depletion Expense. 25. To record depletion expense, Depletion Expense is debited and a contra asset account, Accumulated Depletion, is credited. a. Depletion expense is reported as a cost of producing the product. b. Accumulated Depletion is deducted from the cost of the natural resource in the balance sheet. Intangible Assets 26. (L.O. 6) Intangible assets are rights, privileges, and competitive advantages that result from the ownership of assets that do not possess physical substance. Intangibles may arise from government grants, acquisition of another business, and private monopolistic arrangements.
13 27. In general, accounting for intangible assets parallels the accounting for plant assets. Intangible assets are (a) recorded at cost, (b) cost is written off over useful life in a rational and systematic manner, assuming the useful life is limited, and (c) at disposal, book value is eliminated and gain or loss, if any, is recorded. If the life of the intangible is indefinite, the cost of the intangible should not be allocated. 28. Differences between the accounting for intangible assets and the accounting for plant assets include: a. The systematic write-off of an intangible asset is referred to as amortization. b. To record amortization, Amortization Expense is debited and the specific intangible asset is credited. c. Amortization is typically computed on a straight-line basis. Patents 29. A patent is an exclusive right issued by the U.S. Patent Office that enables the recipient to manufacture, sell, or otherwise control his or her invention for a period of twenty years from the date of grant. a. The initial cost of a patent is the cash or cash equivalent price paid when the patent is acquired. b. When legal costs are incurred in successfully defending the patent, they are added to the Patents account and amortized over the remaining useful life of the patent. c. The cost of the patent should be amortized over its legal life (20 years) or useful life, whichever is shorter. Copyrights 30. Copyrights are granted by the federal government, giving the owner the exclusive right to reproduce and sell an artistic or published work. Copyrights extend for the life of the creator plus 70 years. Trademark or Trade name 31. A trademark or trade name is a word, phrase, jingle, or symbol that distinguishes or identifies a particular enterprise or product. Franchise 32. A franchise is a contractual arrangement under which the franchisor grants the franchisee the right to sell certain products, to perform specific services, or to use certain trademarks or trade names, usually within a designated geographic area. Another type of franchise, commonly referred to as a license or permit, is entered into between a governmental body and a business enterprise and permits the enterprise to use public property in performing its services.
14 Goodwill 33. Goodwill is the value of all favorable attributes that relate to a business enterprise such as exceptional management, skilled employees, high-quality products, fair pricing policies, and harmonious relations with labor unions. a. Goodwill can be identified only with the business as a whole. b. Goodwill is recorded only when there is an exchange transaction that involves the purchase of an entire business. c. When an entire business is purchased, goodwill is the excess of cost over the fair value of the net assets (assets less liabilities) acquired. 34. Goodwill is not amortized because it is considered to have an indefinite life. Research and Development 35. Research and development costs are costs that are spent on developing new products and processes. Such costs are usually recorded as an expense when incurred. Financial Statement Presentation 36. (L.O. 7) In the balance sheet, plant assets and natural resources are usually combined under Property, Plant, and Equipment and intangibles are shown separately under Intangible Assets. a. There should be disclosure of the balances in the major classes of assets and accumulated depreciation of major classes of assets or in total. b. Depreciation and amortization methods used should be described and the amount of depreciation and amortization expense for the period disclosed.
Chapter 9. Plant Assets. Determining the Cost of Plant Assets
Chapter 9 Plant Assets Plant Assets are also called fixed assets; property, plant and equipment; plant and equipment; long-term assets; operational assets; and long-lived assets. They are characterized
More informationCollege Accounting Chapter 10 Plant Assets, Natural Resources, and Intangibles
College Accounting Chapter 10 Plant Assets, Natural Resources, and Intangibles 1. HOW DOES A BUSINESS MEASURE THE COST OF A PLANT ASSET? Plant assets are long-lived, tangible assets used in the operation
More informationASSIGNMENT CHARACTERISTICS TABLE
CHAPTER 9 Long-Lived Assets ASSIGNMENT CLASSIFICATION TABLE Study Objectives Questions Brief Exercises Exercises Problems Set A Problems Set B 1. Apply the cost principle to property, plant, and equipment.
More informationDepreciation and Depletion
CHAPTER Depreciation and Depletion CHAPTER OBJECTIVES After careful study of this chapter, you will be able to: 1. Identify the factors involved in depreciation. 2. Explain the alternative methods of cost
More informationAccounting Building Business Skills. Learning Objectives. Learning Objectives. Paul D. Kimmel
Accounting Building Business Skills Paul D. Kimmel Chapter Eight: Reporting and Analysing Non-current assets PowerPoint presentation by Christine Langridge Swinburne University of Technology, Lilydale
More informationAccounting Notes. Types (classifications) of Assets:
Types (classifications) of s: 1) Current s - short lived assets used in the operations of a business 2) Plant s - long lived tangible assets used in the operations of a business 3) Long Term Investment
More informationvalue, also called residual value or scrap value, is an estimate of the asset's value at the end of its benefit period.
value, also called residual value or scrap value, is an estimate of the asset's value at the end of its benefit period. ~ Your answer is correct! Read about this Leftover Useful Obsolescence The correct
More informationREVIEW FOR EXAM NO. 3, ACCT-2301 (SAC) (Chapters 7-9)
REVIEW FOR EXAM NO. 3, ACCT-2301 (SAC) (Chapters 7-9) A. Chapter 7. 1. Internal Control Objectives. a. Safeguards to protect assets. b. Procedures to insure reliable financial reports. c. Methods to insure
More informationFinancial Accounting and Reporting Exam Review. Fixed Assets. Chapter Five. Black CPA Review www.blackcpareview.com Chapter 5
Fixed Assets Chapter Five Black CPA Review www.blackcpareview.com Chapter 5 Objectives: Objective 1: Know which costs associated with the purchase of fixed assets are capitalized Objective 2: Understand
More informationCHAPTER 12. Intangible Assets 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 9, 10, 13, 14, 25. 3. Goodwill. 12, 13, 14, 18 6, 8 6, 12, 13, 15
CHAPTER 12 Intangible Assets ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Intangible assets; concepts, definitions; items comprising
More informationCHAPTER 10. Acquisition and Disposition of Property, Plant, and Equipment 1, 2, 3, 5, 6, 11, 12, 21 11, 15, 16 8, 9, 10, 11, 12
CHAPTER 10 Acquisition and Disposition of Property, Plant, and Equipment ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Valuation
More informationChapter 8 Accounting for Receivable
Chapter 8 Accounting for Receivable Type of receivable: Receivable refers to amounts due from individuals and companies. o Account receivable: Amount customer owe on account, result from sales of goods
More informationLong-Lived Assets. 1. How the matching principle underlies the methods used to account for long-lived assets.
CHAPTER 9 Long-Lived Assets SYNOPSIS In this chapter, the author discusses (1) accounting for the acquisition, use, and disposal of long-lived assets, and (2) management's incentives for selecting accounting
More informationCHAPTER 12. Intangible Assets 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 25. 3. Goodwill. 12, 13, 14, 18 5, 8, 9 12, 13, 15 5, 6
CHAPTER 12 Intangible Assets ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Intangible assets; concepts, definitions; items comprising
More informationAccounting Test Paper Questions with Answers On Accounting For Depreciation Of Fixed Assets
NOTE: This Accounting test paper on Accounting Concepts is divided into two sections: Section A: 10 questions on Or Section B: 20 questions on Multiple Choice Question Section A: Questions On or 1. Depreciation
More information6. Depreciation is a process of a. asset devaluation. b. cost accumulation. c. cost allocation. d. asset valuation.
1. A company purchased land for $72,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start.
More informationCHAPTER 11. DEPRECIATION & Depletion DEPRECIATION. Property is Depreciable if it must:
DEPRECIATION & Depletion CHAPTER 11 By: Magdy Akladios, PhD, PE, CSP, CPE, CSHM DEPRECIATION Decrease in value of physical properties with passage of time and use Accounting concept establishing annual
More informationChapter Overview Chapter 10 Acquisition and Disposition of Property, Plant, and Equipment Learning Objectives Learning Objectives Chapter Overview
Chapter 10 Chapter Overview Acquisition and Disposition of Property, Plant, And Equipment Chapter 10 Valuation at date of acquisition Disposition of assets Annual reports: Dr. Pepper, Winnebago, Intel,
More informationAccounting 1010 Sample Exam 3 Chapters 7, 8, and 9
Accounting 1010 Sample Exam 3 Chapters 7, 8, and 9 Name Multiple Choice: Circle the letter corresponding to the best answer for each question. Only circle one answer per question. Problems: Show ALL work
More informationINDONESIAN INSTITUTE OF ACCOUNTANTS FIXED ASSETS AND OTHER ASSETS
STATEMENT OF SFAS No. FINANCIAL ACCOUNTING STANDARD 16 INDONESIAN INSTITUTE OF ACCOUNTANTS FIXED ASSETS AND OTHER ASSETS Statement of Financial Accounting Standard (SFAS) No.16, Fixed Assets and Other
More informationUniversity System of Maryland Capital Asset & Depreciation Guidance
University System of Maryland Capital Asset & Depreciation Guidance Prepared by USM Office Final as of June 27, 2002 Introduction The purpose of this document is to provide guidance for the uniform recording
More informationAccounting for Fixed Assets and Depreciation
Accounting for Fixed Assets and Depreciation Chapter 9 1 Luby & O Donoghue (2005) Capital & revenue transactions Capital expenditure is money spent to either: Buy fixed asset, or Add to the value of an
More informationNumber: 1-3 Date Issued: July 15, 1999 Date Revised: October 26, 2010. Subject: Responsible Department: Approved: Purpose. Definitions of Terms
ADMINISTRATIVE ORDER Subject: Responsible Department: Financial Fixed Assets Inventory Finance Number: 1-3 Date Issued: July 15, 1999 Date Revised: Approved: Purpose To establish a uniform policy for the
More informationChapter 8 Accounting for Receivables
Chapter 8 Accounting for Receivables Types of Receivables Receivables: amounts due from individuals and companies that are expected to be collected in cash. 1. Accounts Receivables: amounts owed by customers
More information2.5.1. to the assets. operations of the City of South Bend. consent and. Effective: January 1, 2013. Category Land. Buildings.
Administrationn & Finance Policy Manual 2.5.1 Fixed Asset Procedure Effective: January 1, 2013 Purpose: This proceduree defines the capital asset capitalization practice for the City of South Bend. The
More informationACCT 265 Chapter 10 Review
ACCT 265 Chapter 10 Review This chapter deals with the accounting for Property Plant & Equipment (PPE) or Capital Assets. When recording cost of PPE, the price of the asset is not the only cost recorded
More informationCHAPTER 16. Non-current assets: Revaluation, disposal and other aspects CONTENTS
CHAPTER 16 Non-current assets: Revaluation, disposal and other aspects CONTENTS 16.1 Non-current asset disposals 16.2 Revaluation and disposal 16.3 Intangibles and natural resources 16.4 Goodwill and discount
More informationT17-1 REVIEW EXERCISES CHAPTER 17 SECTION I. Calculate the total cost, total depreciation, and annual depreciation for the following
T17-1 REVIEW EXERCISES CHAPTER 17 SECTION I Calculate the total cost, total depreciation, and annual depreciation for the following assets by using the straight-line method: Freight Setup Total Salvage
More informationCHAPTER 10. Acquisition and Disposition of Property, Plant, and Equipment 1, 2, 3, 4, 6, 7, 12, 13, 18 16, 18, 19, 22
CHAPTER 10 Acquisition and Disposition of Property, Plant, and Equipment ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Valuation
More informationAS 6: Depreciation Accounting
AS 6: Depreciation Accounting IPCC Paper 1: Accounting Chapter 1 Unit 2 Depreciation - AS 6 CA. Yagnesh Desai 1 Introduction This statement deals with depreciation accounting and applies to all depreciable
More informationThe early part of the article explains in detail the nature and purpose of Depreciation as a book-keeping and accounting concept.
Depreciation Editorial This months students' newsletter focuses on the concept of Depreciation a knowledge of which is essential to those studying Manual Book-Keeping Level 3 and the Level 3 Computerised
More informationDepreciation and Depletion
Depreciation and Depletion For Prefeasibility Studies Depreciation and Depletion Prefeasibility Studies often are completed prior to having all the information needed or engineering completed. Depreciation
More informationAccounting for Fixed Assets
96 Accounting Standard (AS) 10 Accounting for Fixed Assets Contents INTRODUCTION Paragraphs 1-6 Definitions 6 EXPLANATION 7-17 Identification of Fixed Assets 8 Components of Cost 9 Self-constructed Fixed
More informationINTERNATIONAL ACCOUNTING STANDARDS. CIE Guidance for teachers of. 7110 Principles of Accounts and. 0452 Accounting
www.xtremepapers.com INTERNATIONAL ACCOUNTING STANDARDS CIE Guidance for teachers of 7110 Principles of Accounts and 0452 Accounting 1 CONTENTS Introduction...3 Use of this document... 3 Users of financial
More informationAppendix to the Questionnaire on Initial accounting for intangible assets acquired in Business Combinations
Appendix to the Questionnaire on Initial accounting for intangible assets acquired in Business Combinations In January 2008, the IASB completed the second phase of its Business Combinations project. As
More informationINTANGIBLE ASSETS IAS 38
INTANGIBLE ASSETS IAS 38 Road Map on IAS 38 1. Definition of intangible asset 2. Recognition and measurement 3. Recognition of expense 4. Measurement after recognition 5. Useful life 6. Intangible assets
More informationEMERGING ISSUES IN ACCOUNTING FOR INTANGIBLE ASSETS
International Journal of Economics, Commerce and Management United Kingdom Vol. IV, Issue 1, January 2016 http://ijecm.co.uk/ ISSN 2348 0386 EMERGING ISSUES IN ACCOUNTING FOR INTANGIBLE ASSETS Babu Bakhsh
More informationSri Lanka Accounting Standard LKAS 16. Property, Plant and Equipment
Sri Lanka Accounting Standard LKAS 16 Property, Plant and Equipment CONTENTS paragraphs SRI LANKA ACCOUNTING STANDARD LKAS 16 PROPERTY, PLANT AND EQUIPMENT OBJECTIVE 1 SCOPE 2 DEFINITIONS 6 RECOGNITION
More informationCITY OF PORT ST LUCIE FINANCIAL POLICY CAPITAL ASSETS
CITY OF PORT ST LUCIE FINANCIAL POLICY CAPITAL ASSETS I. PURPOSE To provide effective guidelines for the recording, tracking, capitalizing, and safeguarding of the City's Capital assets. II. POLICY In
More informationUniversity Enterprises, Inc. Fixed Asset and Intangible Asset Policy
Section: Policy: Business Services Fixed Asset and Intangible Asset Policy Effective or Revised: December 11, 2015 University Enterprises, Inc. Fixed Asset and Intangible Asset Policy l. PURPOSE To provide
More informationOperating Working Capital Drills
Operating Working Capital Drills Operating Working Capital Drills 1. Use IBM s balance sheet below to calculate 2010 and 2011 working capital and operating working capital. Your VP has told you to consider
More informationAccounting for Business Combinations: The FASB Acts
Accounting for Business Combinations: The FASB Acts July 2001 The Basis for Your Decisions 1920 N Street, N.W. Suite 350, Washington, D.C. 20036-1601 Phone 202-775-8870 Fax 202-775-0175 www.bondpecaro.com
More informationACCOUNTING FOR LEASES AND HIRE PURCHASE CONTRACTS
Issued 07/85 Revised 06/90 New Zealand Society of Accountants STATEMENT OF STANDARD ACCOUNTING PRACTICE NO. 18 Revised 1990 ACCOUNTING FOR LEASES AND HIRE PURCHASE CONTRACTS Issued by the Council, New
More informationFEDERAL TAX ISSUES FACING VINEYARD AND WINERY OWNERS
FEDERAL TAX ISSUES FACING VINEYARD AND WINERY OWNERS I. ACCOUNTING RULES In May 1995, the Internal Revenue Service ( IRS ) released a report highlighting tax issues of specific importance to the wine industry
More information1999 Instructions for Schedule E, Supplemental Income and Loss
1999 Instructions for Schedule E, Supplemental Income Loss Use Schedule E (Form 1040) to report income or loss from rental real estate, royalties, partnerships, S corporations, estates, trusts, residual
More informationProperty, Plant and Equipment
STATUTORY BOARD FINANCIAL REPORTING STANDARD SB-FRS 16 Property, Plant and Equipment SB-FRS 16 Property, Plant and Equipment applies to Statutory Boards for annual periods beginning on or after 1 January
More informationRAPID REVIEW Chapter Content
RAPID REVIEW BASIC ACCOUNTING EQUATION (Chapter 2) INVENTORY (Chapters 5 and 6) Basic Equation Assets Owner s Equity Expanded Owner s Owner s Assets Equation = Liabilities Capital Drawing Revenues Debit
More informationChapter 3 Unit 1. IET 35000 Engineering Economics. Learning Objectives Chapter 3. Learning Objectives Unit 1
Chapter 3 Unit 1 The Accounting Equation Depreciation, Inventory and Ratios IET 35000 Engineering Economics Learning Objectives Chapter 3 Upon completion of this chapter you should understand: Accounting
More informationWashington Utilities and Transportation Commission
Mission Statement: The UTC protects consumers by ensuring that utility and transportation services are fairly priced, available, reliable, and safe. Washington Utilities and Transportation Commission Principles
More informationDepreciation Accounting
56 Accounting Standard (AS) 6 Depreciation Accounting Contents INTRODUCTION Paragraphs 1-3 Definitions 3 EXPLANATION 4-19 Disclosure 17-19 MAIN PRINCIPLES 20-29 94 AS 6 (issued 1982) Accounting Standard
More informationChapter 3 the balance sheet and the statement of changes in stockholder. equity
Full Picture for Intermediate Accounting (I) Chapter 3 the balance sheet ASSET LIABILITY Current Chapter 6 cash and receivables Chapter 7/8 inventories Chapter 12 current liabilities and contingencies
More informationAdjusting Entries and the Work Sheet
Heintz & Parry th Edition Chapter 5 th Edition College Accounting Adjusting Entries and the Work Sheet 1 Prepare end-of-period adjustments. END-OF-PERIOD ADJUSTMENTS Changes occur that affect the business
More informationCHAPTER 20. Non-current assets: Acquisition and depreciation CONTENTS
CHAPTER 20 Non-current assets: Acquisition and depreciation CONTENTS 20.1 Cost of various assets 20.2 Depreciation methods and partial years 20.3 Comprehensive problem 20.4 Correcting errors 20.5 Property
More informationSOLUTIONS TO EXERCISES
EXERCISE 10-1 (15 20 minutes) SOLUTIONS TO EXERCISES Item Land Land Improvements Building Other Accounts (a) ($275,000) Notes Payable (b) $275,000 (c) $ 8,000 (d) 7,000 (e) 6,000 (f) (1,000) (g) 22,000
More informationACCOUNTING 105 CONCEPTS REVIEW
ACCOUNTING 105 CONCEPTS REVIEW A note from the tutors: This handout is designed to help you review important information as you study for your cumulative final exam. While it does cover many important
More informationTitle: FIXED ASSET ACCOUNTING Code: B0108
POLICY Title: FIXED ASSET ACCOUNTING Code: B0108 Authority: Board Minutes, 9/16/91; 10/28/97 Original Adoption: 9/16/91 Revised/Reviewed: 10/28/97 Effective: 10/29/97 It is the policy of the Board that
More informationTREASURER S DIRECTIONS ACCOUNTING LIABILITIES Section A3.6 : Leases
TREASURER S DIRECTIONS ACCOUNTING LIABILITIES Section A3.6 : Leases STATEMENT OF INTENT Assets required by Agencies to deliver outputs can be obtained by purchase or by lease. This Section provides the
More informationConsolidated financial statements
Summary of significant accounting policies Basis of preparation DSM s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted
More informationAnswer on Question #41857, Management, Other
Answer on Question #41857, Management, Other Distinguish between Revenue Expenditure and capital expenditure. How are they treated while preparing the final accounts? If by mistake the accountant of a
More informationIAS 38 Intangible Assets
2012 Technical Summary IAS 38 Intangible Assets as issued at 1 January 2012. Includes IFRSs with an effective date after 1 January 2012 but not the IFRSs they will replace. This extract has been prepared
More information$20,000 invoice price 1,500 sales tax 500 freight 200 set-up (contractor) $22,200 total cost
Section 2 DEPRECIATION UNDER GAAP (FOR BOOK PURPOSES) Introduction Most plant and equipment assets wear out or become obsolete over the years. Similarly, although land is not depreciated (because it does
More informationChapter 10: Depreciation
Chapter 10: Depreciation Depreciation A decrease in value of an asset each year A non-cash cost (no money changing hands) that affects income taxes An annual deduction against before-tax income A business
More information2. Adjustments to Federal Taxable Income The following additions to Federal taxable income must be made in determining State net income:
C. Computation of Net Income (G.S. 105-130.3, G.S. 105-130.5) 1. Preliminary Statement To compute State net income or net loss, a corporation uses its Federal taxable income as defined in the Internal
More informationHow To Account For Revenue Under Accrual Accounting
BAT 4M: Chapter 3 ANSWERS TO QUESTIONS 01. (a) Under the time period assumption, an accountant is required to determine the relevance of each business transaction to specific accounting periods, and its
More informationQuiz Questions for Chapter 9
Quiz Questions for Chapter 9 1. A truck was purchased for $25,000. It has a six-year life and a $4,000 salvage value. Using straight-line depreciation, what is the asset s carrying value (book value) after
More informationA Assets and Other Debits: Code and Definitions 2-A-1. B Liabilities and Other Credits: Code and Definitions 2-B-1
Section: Chapter Contents Date: June 006 Section Page A Assets and Other Debits: Code and Definitions -A-1 B Liabilities and Other Credits: Code and Definitions -B-1 NOTE 1: In order to maintain uniformity
More informationHow To Account For Property, Plant And Equipment
International Accounting Standard 16 Property, Plant and Equipment Objective 1 The objective of this Standard is to prescribe the accounting treatment for property, plant and equipment so that users of
More informationIPSAS 13 LEASES Acknowledgment
IPSAS 13 LEASES Acknowledgment This International Public Sector Accounting Standard is drawn primarily from International Accounting Standard (IAS) 17 (revised 2003), Leases published by the International
More informationACCOUNTING COMPETENCY EXAM SAMPLE EXAM. 2. The financial statement or statements that pertain to a stated period of time is (are) the:
ACCOUNTING COMPETENCY EXAM SAMPLE EXAM 1. The accounting process does not include: a. interpreting d. observing b. reporting e. classifying c. purchasing 2. The financial statement or statements that pertain
More informationCHAPTER 3: PREPARING FINANCIAL STATEMENTS
CHAPTER 3: PREPARING FINANCIAL STATEMENTS I. TIMING AND REPORTING A. The Accounting Period Time period assumption an organization s activities can be divided into specific time periods. Examples: a month,
More informationProperty, Plant and Equipment
Indian Accounting Standard (Ind AS) 16 Property, Plant and Equipment Property, Plant and Equipment Contents Paragraphs OBJECTIVE 1 SCOPE 2-5 DEFINITIONS 6 RECOGNITION 7 14 Initial costs 11 Subsequent costs
More informationIntangible Assets. International Accounting Standard 38 IAS 38
International Accounting Standard 38 Intangible Assets This version includes amendments resulting from IFRSs issued up to 31 December 2008. IAS 38 Intangible Assets was issued by the International Accounting
More informationStatement of Financial Accounting Standards No. 13
Statement of Financial Accounting Standards No. 13 FAS13 Status Page FAS13 Summary Accounting for Leases November 1976 Financial Accounting Standards Board of the Financial Accounting Foundation 401 MERRITT
More informationIntermediate Accounting
Intermediate Accounting Thomas H. Beechy Schulich School of Business, York University Joan E. D. Conrod Faculty of Management, Dalhousie University PowerPoint slides by: Bruce W. MacLean, Faculty of Management,
More informationFINAL EXAM The Hashemite University, Department of Accounting, Dr Husam Al-Khadash Principle of Accounting,
FINAL EXAM The Hashemite University, Department of Accounting, Dr Husam Al-Khadash Principle of Accounting, Name: Seat No. Student No. Question One (11 marks): Identify the answer of each of the following
More informationCHAPTER 12 AUDITING LONG-LIVED ASSETS: ACQUISITION, USE, IMPAIRMENT, AND DISPOSAL
A U D I T I N G A RISK-BASED APPROACH TO CONDUCTING A QUALITY AUDIT 9 th Edition Karla M. Johnstone Audrey A. Gramling Larry E. Rittenberg CHAPTER 12 AUDITING LONG-LIVED ASSETS: ACQUISITION, USE, IMPAIRMENT,
More informationThe Form 4562 Explained
The Form 4562 Explained Depreciation & Amortization Overview Owen E. McCafferty, CPA, Inc. Definitions and Concepts Depreciation Defined According to the IRS, Depreciation is the yearly deduction allowed
More informationAccounting and reporting by charities EXPOSURE DRAFT
10. Balance sheet Introduction 10.1. All charities preparing accruals accounts must prepare a balance sheet at the end of each reporting period which gives a true and fair view of their financial position.
More informationFIXED ASSET PROCEDURES
FIXED ASSET PROCEDURES To comply with the fixed asset capitalization and inventory policy adopted by the Governing Board, and to ensure compliance with the GASB 34 (Government Accounting Board Statement
More informationDISTRICT SCHOOL BOARD & SCHOOL AUTHORITY TANGIBLE CAPITAL ASSETS PROVINCIAL ACCOUNTING POLICIES & IMPLEMENTATION GUIDE
DISTRICT SCHOOL BOARD & SCHOOL AUTHORITY TANGIBLE CAPITAL ASSETS PROVINCIAL ACCOUNTING POLICIES & IMPLEMENTATION GUIDE REVISED April 2015 INCLUDES UP TO RELEASE NO. 10 Table of Contents General Introduction...
More informationFIXED ASSET CAPITALIZATION. The Fort Dodge Community School District Fixed Asset Capitalization Policy follows
Policy: 0 FIXED ASSET CAPITALIZATION I. Purpose The Fort Dodge Community School District Fixed Asset Capitalization Policy follows the requirements set forth by the Government Accounting Standards Board
More informationManage Risk with Fixed Assets
Manage Risk with Fixed Assets Presented by: V. Lynn Lambert, CPA Lambert Lanoue & Smoker LLC www.lambertcpas.com Outline Analysis of Lease vs Purchase of Fixed Assets New IRS Repair Regulations Capital
More informationEUROPEAN UNION ACCOUNTING RULE 6 INTANGIBLE ASSETS
EUROPEAN UNION ACCOUNTING RULE 6 INTANGIBLE ASSETS Page 2 of 17 I N D E X 1. Objective... 3 2. Scope... 3 3. Definitions... 3 4. Definition of intangible assets... 4 5. Recognition and Measurement... 5
More informationManual of Accounting and Financial Reporting for Pennsylvania Public Schools CHAPTER 11 TABLE OF CONTENTS 11.A. Chapter 11 11.1
Manual of Accounting and Financial Reporting for Pennsylvania Public Schools CHAPTER 11 TABLE OF CONTENTS 11.1 Capital Assets And Infrastructure 11.1 What Are Capital Assets? 11.1 Valuation Of Capital
More informationSAMPLE CONDOMINIUM FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 INDEX INDEPENDENT AUDITORS REPORT... 1 FINANCIAL STATEMENTS: BALANCE SHEETS... 2 3 STATEMENTS OF OPERATIONS AND CHANGES IN MEMBERS EQUITY...
More informationAccounting standard. Intangible Assets. Vinod Kothari. Vinod Kothari http://www.vinodkothari.com 1012 Krishna 224 AJC Bose Road
Accounting standard no 26 Intangible Assets Vinod Kothari Vinod Kothari http://www.vinodkothari.com h i 1012 Krishna 224 AJC Bose Road Kolkata - 700 017. India E-mail: vinod@vinodkothari.com Phone 91-33-22817715/
More informationCHAPTER 4. 401. General Purpose... 1. 402. Definitions and Capitalization Policies... 1. 403. Budget Procedures... 2
Kern County Policy and Administrative Procedures Manual CHAPTER 4 CAPITAL ASSET ACCOUNTING Section Page 401. General Purpose... 1 402. Definitions and Capitalization Policies... 1 403. Budget Procedures...
More informationCOMPONENTS OF THE STATEMENT OF CASH FLOWS
ILLUSTRATION 24-1 OPERATING, INVESTING, AND FINANCING ACTIVITIES COMPONENTS OF THE STATEMENT OF CASH FLOWS CASH FLOWS FROM OPERATING ACTIVITIES + Sales and Service Revenue Received Cost of Sales Paid Selling
More informationCASH FLOW STATEMENT & BALANCE SHEET GUIDE
CASH FLOW STATEMENT & BALANCE SHEET GUIDE The Agriculture Development Council requires the submission of a cash flow statement and balance sheet that provide annual financial projections for the business
More informationAccounting Policies. 4.02 Land and Land Improvements. 4.03 Buildings and Building Service Equipment. 4.04 Leasehold Improvements
Page 1 of 14 Accounting Policies Section 4.0 Capital Assets 4.01 Capital Assets Defined 4.02 Land and Land Improvements 4.03 Buildings and Building Service Equipment 4.04 Leasehold Improvements 4.05 Equipment
More informationInternational Accounting Standard 38 (IAS 38), Intangible Assets
International Accounting Standard 38 (IAS 38), Intangible Assets By BRIAN FRIEDRICH, MEd, CGA, FCCA(UK), CertIFR and LAURA FRIEDRICH, MSc, CGA, FCCA(UK), CertIFR Updated By STEPHEN SPECTOR, MA, FCGA This
More informationBRIEF OVERVIEW OF PENNSYLVANIA PERSONAL INCOME TAX
CHAPTER 6: BRIEF OVERVIEW OF PENNSYLVANIA PERSONAL INCOME TAX TABLE OF CONTENTS I. OVERVIEW 2 II. TAX RATE...3 III. EIGHT CLASSES OF INCOME 3 A. Gross Compensation... 3 B. Interest... 4 C. Dividends...
More informationWATER UTILITY REFERENCE MANUAL
Utility Plant and Accumulated Depreciation Capitalization Policy Costs are capitalized in the utility plant accounts, rather than being expensed in the current year, if: the service life is more than one
More informationIllustrative Examples Business Combinations
STATUTORY BOARD FINANCIAL REPORTING STANDARD SB-FRS 103 Illustrative Examples Business Combinations SB-FRS 103 Business Combinations Illustrative Examples Contents Examples of items acquired in a business
More informationSage Fixed Assets Government accounting for fixed assets. Government Accounting for Fixed Assets GASB guidelines for your organization
Government Accounting for Fixed Assets GASB guidelines for your organization 1 Table of contents Government Accounting for Fixed Assets 3 GASB Statement No. 34: depreciating capital assets 4 Defining capital
More informationFinancial Reporting & Analysis Chapter 17 Solutions Statement of Cash Flows Exercises
Financial Reporting & Analysis Chapter 17 Solutions Statement of Cash Flows Exercises Exercises E17-1. Determining cash flows from operations Using the indirect method, cash flow from operations is computed
More informationInternational Accounting Standard 36 Impairment of Assets
International Accounting Standard 36 Impairment of Assets Objective 1 The objective of this Standard is to prescribe the procedures that an entity applies to ensure that its assets are carried at no more
More informationIntangible assets other than Goodwill, Business combinations and Goodwill
Intangible assets other than Goodwill, Business combinations and Goodwill 1.1. Recognition An entity shall apply the recognition criteria stated in Section Concepts and Principles of IFRS for SMEs for
More information