会计学人大出版英文版第23版Chap010课件

Property,Plant,andEquipment

andIntangibleAssets:Acquisition

andDisposition10McGraw-Hill/IrwinCopyright©2011bytheMcGraw-HillCompanies,Inc.Allrightsreserved.Long-lived,Revenue-producingAssetsTypesofAssetsExpectedtoBenefitFuturePeriodsGeneralRuleforCostCapitalizationTheinitialcostofanassetincludesthepurchasepriceandallexpendituresnecessarytobringtheassettoitsdesiredconditionandlocationforuse.EquipmentNetpurchasepriceTaxesTransportationcostsInstallationcostsModificationtobuilding

necessarytoinstall

equipmentTestingandtrialrunsCoststobeCapitalizedLand(notdepreciable)PurchasepriceRealestatecommissionsAttorney’sfeesTitlesearchTitletransferfeesTitleinsurancepremiumsRemovingoldbuildingsLandImprovementsSeparatelyidentifiablecostsofDrivewaysParkinglotsFencingLandscapingPrivateroadsBuildingsPurchasepriceAttorney’sfeesCommissionsReconditioningCoststobeCapitalizedNaturalResourcesAcquisitioncostsExplorationcostsDevelopmentcostsRestorationcostsTheinitialcostofanintangibleassetincludesthepurchasepriceandallothercostsnecessarytobringittoconditionandlocationforuse,suchaslegalandfilingfees.IntangibleAssetsPatentsCopyrightsTrademarksFranchisesGoodwillCoststobeCapitalizedAssetRetirementObligationsRecognizetherestorationcosts

asaliabilityandacorresponding

increaseintherelatedasset.Recordatfairvalue,usuallythe

presentvalueoffuturecash

outflowsassociatedwiththe

reclamationorrestoration.Oftenencounteredwithnaturalresource

extractionwhenthelandmustbe

restoredtoauseablecondition.IntangibleAssetsLackphysical

substance.Exclusive

Rights.Intangible

AssetsFuturebenefitslesscertain

thantangibleassets.AnexclusiverightrecognizedbylawandgrantedbytheUSPatentOfficefor20years.Holderhastherighttouse,manufacture,orsellthepatentedproductorprocesswithoutinterferenceorinfringementbyothers.R&Dcoststhatleadtoaninternallydevelopedpatentareexpensedintheperiodincurred.IntangibleAssets─PatentsTorch,Inc.hasdevelopedanewdevice.Researchanddevelopmentcoststotaled$30,000.Patentregistrationcostsconsistedof$2,000inattorneyfeesand$1,000infederalregistrationfees.WhatisTorch’spatentcost?Torch’scostforthenewpatentis$3,000.The$30,000R&Dcostisexpensedasincurred.CopyrightsAformofprotectiongivenbylawtoauthorsofliterary,musical,artistic,andsimilarworks.Copyrightownershaveexclusiverightstoprint,reprint,copy,sellordistribute,performandrecordthework.Generally,thelegallifeofacopyrightisthelifeoftheauthorplus70years.TrademarksAsymbol,design,orlogoassociatedwithabusiness.Ifinternallydeveloped,trademarkshavenorecordedassetcost.Ifpurchased,atrademarkisrecordedatcost.RegisteredwithU.S.PatentOfficeandrenewableindefinitelyin10-yearperiods.IntangibleAssetsOccurswhenone

companybuys

anothercompany.Theamountbywhichthe

considerationexchangedexceeds

thefairvalueofnetassetsacquired.Onlypurchased

goodwillisan

intangibleasset.Acontractualarrangementwherethefranchisorgrantsthefranchiseeexclusiverightstousethefranchisor’strademarkwithinacertainareaforaspecifiedperiodoftime.GoodwillFranchiseIntangibleAssetsEddyCompanypaid$1,000,000topurchaseallofJamesCompany’sassetsandassumedJamesCompany’sliabilitiesof$200,000.JamesCompany’sassetswereappraisedatafairvalueof$900,000.WhatamountofgoodwillshouldEddycompanyrecordasaresultofthepurchase?GoodwillSeveralassetsareacquiredforasinglepricethatmay

belowerthanthesumoftheindividualassetfairvalues.Lump-SumPurchasesAsset2Asset1Asset3Allocationofthelump-sumpriceisbased

onrelativefairvaluesoftheindividualassets.OnMay13,wepurchaselandandbuildingfor$200,000cash.Theappraisedvalueofthebuildingis$162,500,andthelandisappraisedat$87,500.Howmuchofthe$200,000purchasepricewillbeallocatedtothebuildingaccount?Lump-SumPurchasesMay13:Land.......................................................... 70,000Building….…….…………… 130,000

Cash……………..... 200,000Torecordlump-sumpurchaseoflandandbuilding.NoncashAcquisitionsIssuanceofequitysecuritiesDeferredpaymentsDonatedAssetsExchangesTheassetacquiredisrecordedatthefairvalueoftheconsiderationgivenorthefairvalueoftheassetacquired,whicheverismoreclearlyevident.DeferredPaymentsNotepayableMarketinterest

rateRecordassetat

facevalueofnoteLessthanmarketrate

ornoninterestbearingRecordassetatpresent

valueoffuturecashflows.OnJanuary2,2011,MidwesternCorporationpurchasedequipmentbysigninganoninterest-bearingnoterequiring$50,000tobepaidonDecember31,2012.Theprevailingmarketrateofinterestonnotesofthisnatureis10%.

PreparetherequiredjournalentriesforMidwesternonJanuary2,2011;December31,2011(year-end),andDecember31,2012(year-end).Wedonotknowthecashequivalentprice,sowemustusethepresentvalueofthefuturecashpayment.DeferredPaymentsDeferredPaymentsJanuary2,2011:Equipment........................................................... 41,323Discountonnotepayable….….…….…………… 8,677 Notepayable………….... 50,000Torecordequipmentacquisition.December31,2011:Interestexpense(10%of$41,323)...................... 4,132 Discountonnotepayable……………… 4,132Torecordinterestexpense.December31,2012:Interestexpense(10%of($41,323+$4,132))...... 4,545 Discountonnotepayable……..……..… 4,545Torecordinterestexpense.December31,2012Notepayable........................................................ 50,000 Cash……..……………..… 50,000To

recordpaymentofnote.IssuanceofEquitySecuritiesAssetacquiredisrecordedatthefairvalueoftheassetorthemarketvalueofthesecurities,whicheverismoreclearlyevident.Ifthesecuritiesareactivelytraded,marketvaluecanbeeasilydetermined.Ifthesecuritiesgivenarenotactivelytraded,thefairvalueoftheassetreceived,asdeterminedbyappraisal,maybemoreclearlyevidentthanthefairvalueofthesecurities.DonatedAssetsOnoccasion,companiesacquireassetsthroughdonation.ThereceivingcompanyisrequiredtorecordThedonatedassetatfairvalue.Revenueequaltothefairvalueofthedonatedasset.Fixed-AssetTurnoverRatioThisratiomeasureshoweffectivelyacompanymanagesitsfixedassetstogeneraterevenue.NetsalesAveragefixedassetsFixedassetturnoverratio=Gymboreegenerates$0.44moreinsalesdollars

foreachdollarinvestedinfixedassets.

=5.13$14,526($2,933+$3,267)/2=4.69$1,001($204+$186)/2DispositionsUpdatedepreciationtodateofdisposal.Removeoriginalcostofassetandaccumulateddepreciationfromthebooks.Thedifferencebetweenbookvalueoftheassetandtheamountreceivedisrecordedasagainorloss.OnJune30,2011,MeLo,Inc.soldequipmentfor$6,350cash.TheequipmentwaspurchasedonJanuary1,2006atacostof$15,000.Theequipmentwasdepreciatedusingthestraight-linemethodoveranestimatedten-yearlifewithzerosalvagevalue.MeLolastrecordeddepreciationontheequipmentonDecember31,2010,itsyear-end.

Preparethejournalentriesnecessaryto

recordthedispositionofthisequipment.

Updatedepreciationtodateofsale.DispositionsJune30,2011:Depreciationexpense($15,000÷10years)×½)....... 750 Accumulateddepreciation………………........ 750Toupdatedepreciationtodateofsale.

Removeoriginalassetcostandaccumulateddepreciation.Recordthegainorloss.June30,2011:Accumulateddepreciation............................................8,250Cash………….……………......................6,350Lossonsale…………….…400 Equipment…………...............… 15,000Torecordsaleofequipment.($15,000÷10years)×5½)=$8,250ExchangesGeneralValuationPrinciple(GVP):Costofassetacquiredis:fairvalueofassetgivenuppluscashpaidorminuscashreceivedorfairvalueofassetacquired,ifitismoreclearlyevidentIntheexchangeofassetsfairvalueisusedexceptinraresituationsinwhichthefairvaluecannotbedeterminedortheexchangelackscommercialsubstance.Whenfairvaluecannotbedeterminedortheexchangelackscommercialsubstance,theasset(s)acquiredarevaluedatthebookvalue

oftheasset(s)givenup,plus(orminus)anycashexchanged.Nogain

isrecognized.FairValueNotDeterminableMatrix,Inc.exchangedusedequipmentfornewerequipment.Duetothenatureoftheassetsexchanged,Matrixcouldnotdeterminethefairvalueoftheassetgivenuporreceived.Theassetgivenuporiginallycost$600,000,andhadanaccumulateddepreciationbalanceof$400,000atthetimeoftheexchange.Matrixexchangedtheassetandpaid$100,000cash.Let’srecordthisunusualtransaction.Matrix,Inc.Thejournalentrybelowshowstheproperrecordingoftheexchange.FairValueNotDeterminableEquipment($200,000+$100,000)................. 300,000Accumulateddepreciation….……………........ 400,000 Equipment……………. 600,000 Cash…………............. 100,000Torecordequipmentacquiredinexchange.ExchangeLacksCommercialSubstanceWhenexchangesarerecordedatfairvalue,anygainorlossisrecognizedforthedifferencebetweenthefairvalueandbookvalueoftheasset(s)given-up.Toprecludethepossibilityofcompaniesengaginginexchangesofappreciatedassetssolelytobeabletorecognizegains,fairvaluecanonlybeusedinlegitimateexchangesthathavecommercialsubstance.Anonmonetaryexchangeisconsideredtohavecommercialsubstanceifthecompany:expectsachangeinfuturecashflowsasaresultofthe

exchange,andthatexpectedchangeissignificantrelativetothefair

valueoftheassetsexchanged.ExchangesMatrix,Inc.exchangednewequipmentand$10,000cashforequipmentownedbyFloat,Inc.BelowisinformationabouttheassetexchangedbyMatrix.Recordthetransactionassumingtheexchangehascommercialsubstance.Gain=FairValue–BookValueGain=$205,000–$200,000=$5,000ExchangesRecordthesametransactionassumingtheexchangelackscommercialsubstance.Equipment............................................... 215,000Accumulateddepreciation………............. 300,000 Equipment……… 500,000 Cash……………. 10,000 Gainonexchange…………….. 5,000Torecordtheexchangeofequipment.$205,000fairvalue+$10,000cashEquipment............................................... 210,000Accumulateddepreciation………............. 300,000 Equipment……… 500,000 Cash…………….. 10,000Torecordtheexchangeofequipment.$200,000bookvalue+$10,000cashSelf-ConstructedAssets

Whenself-constructinganasset,twoaccountingissuesmustbeaddressed:overheadallocationtotheself-constructedasset.incrementaloverheadonlyfull-costapproachpropertreatmentofinterestincurredduringconstructionInterestthatcouldhavebeenavoidediftheassetwerenotconstructedandthemoneyusedtoretiredebt.Assetconstructed:Foracompany’sownuse.Asadiscreteprojectforsaleorlease.Undercertainconditions,interest

incurredonqualifyingassetsiscapitalized.Capitalizationbeginswhen:constructionbeginsinterestisincurred,andqualifyingexpensesareincurred.Capitalizationendswhen:theassetissubstantiallycompleteandreadyforitsintendeduse,orwheninterestcostsnolongerarebeingincurred.InterestCapitalizationInterestiscapitalizedbasedonAverageAccumulatedExpenditures(AAE).Qualifyingexpenditures(constructionlabor,material,andoverhead)weightedforthenumberofmonthsoutstandingduringthecurrentaccountingperiod.Ifthequalifyingassetisfinancedthroughaspecificnewborrowing...usethespecificrateofthenewborrowingasthecapitalizationrate.Ifthereisnospecificnewborrowing,andthecompanyhasotherdebt...usetheweightedaveragecostofotherdebtasthecapitalizationrate.InterestCapitalizationWelling,Inc.isconstructingabuildingforitsownuse.ConstructionactivitiesstartedonMay1andhavecontinuedthroughDec.31.Wellingmadethefollowingqualifyingexpenditures:May1,$125,000;July31,$160,000,Oct.1,$200,000;andDec.1,$300,000.Wellingborrowed$1,000,000onMay1,fromBub’sBankfor10yearsat10percenttofinancetheconstruction.Theloanisrelatedtotheconstructionprojectandthecompanyusesthespecificinterestmethodtocomputetheamountofinteresttocapitalize.AverageAccumulatedExpendituresInterestCapitalizationSincethe$1,000,000ofspecificborrowingissufficienttocoverthe$337,500ofaverageaccumulatedexpendituresfortheyear,usethespecificborrowingrate

of10percenttodeterminetheamountofinteresttocapitalize. Interest=AAE×SpecificBorrowingRate×Time Interest=$337,500×10%×8/12=$22,500Theloan,initiatedonMay1,is

outstandingfor8monthsoftheyear.InterestCapitalizationIfWellinghadnotborrowedspecificallyforthisconstruction

project,itwouldhaveusedtheweighted-averageinterest

method.

Theweightedaverageinterestrateonotherdebtwouldhavebeenusedtocomputetheamountofinterestto

capitalize.Forexample,iftheweighted-averageinterest

rateonotherdebtis12percent,theamountofinterest

capitalizedwouldbe:

Interest=AAE×Weighted-averageRate×Time

Interest=$337,500×12%×8/12=$27,000InterestCapitalizationIfspecificnewborrowinghadbeeninsufficienttocovertheaverageaccumulatedexpenditures...Specific

newborrowingAAE...Capitalizethisportionusingthe10percentspecificborrowingrate.Other

debt...Capitalizethisportionusingthe12percentweighted-averagecostofdebt.InterestCapitalizationResearchandDevelopment(R&D)ResearchPlannedsearchorcriticalinvestigationaimedatdiscoveryofnewknowledge...DevelopmentThetranslationofresearchfindingsorotherknowledgeintoaplanordesign...MostR&Dcostsareexpensedasincurred.(Mustbedisclosedifmaterial.)R&Dcostsincurredundercontractforothercompaniesarecapitalizedasinventoryandcarriedforwardintofutureyears.CostsofassetspurchasedforR&Dpurposesareexpensedintheperiodunlesstheyhavealternativefutureuses.Startof

R&D

ActivityTechnological

FeasibilityDateof

Product

ReleaseSaleof

ProductCosts

Expensed

asR&DCosts

CapitalizedOperating

CostsAllcostsincurredtoestablishthetechnologicalfeasibility

ofacomputersoftwareproductaretreatedasR&Dandexpensedasincurred.Costsincurredaftertechnologicalfeasibilityisestablishedandbeforethesoftwareisavailableforreleasetocustomersarecapitalizedasanintangibleasset.SoftwareDevelopmentCostsSoftwareDevelopmentCostsAmortizationofcapitalizedcomputersoftwarecostsstartswhentheproductbeginstobemarketed.Twomethods,thepercentageofrevenuemethodandthestraight-linemethod,arecomparedandt