《Introduction to Accounting》课件-章节unit 章节8

Unit8FixedAssets&IntangibleAssetsⅠFixedAssetsⅡIntangibleAssets2025/3/142ⅠFixedAssetsFixedassetsarelong-termorrelativelypermanentassetslikeland,building,equipment,etc.They’relong-livedassetsbecausetheirusefullivesareexpectedtolastformorethanoneyear.Fixedassetsarecriticaltoacompany’ssuccessbecausetheydeterminethecompany’scapacityandperformance.Manycompanieshavesubstantialinvestmentsinfixedassets.2025/3/1431.AcquisitionforFixedAssetsTheacquisitioncostisrecordedathistoricalcosttogettheminplaceandreadytouse,includingallexpendituresreasonableandnecessary,suchaspurchaseprice,freightcostspaidbythepurchaser,installationcosts.Dr.FixedAssetsCr.Cash2025/3/144Fixedassetsareacquiredthroughpurchases,bartertrade,capitaltransfersinkind,financiallease,improvementoffixedassetsandnaturalgrowthofthosenaturalassetsthatyieldrepeatproducts.2025/3/145①PurchaseofaBuilding/PlantWhenanexistingbuildingispurchased,itscostincludesthepurchasepriceplusallrepairandmaintenancecostsrequiredtoputinusablecondition.Whenabusinessconstructsitsownbuilding,thecostincludesallreasonableexpenditures,suchasthoseformaterials,labor,andotherindirectcosts,architecturalfees,legalfees,insuranceduringconstructionandbuildingpermits.2025/3/146②PurchaseofLandThecostoflandpurchasedincludescashpriceforpurchase,commissionforrealestateagents,legalfees,accruedtaxespaidbythepurchaser,costoftraining,clearingandgradingassessmentfee.2025/3/147③PurchaseofEquipmentThecostofequipmentincludesallexpendituresingettingitreadyforuse,suchasinvoicepricelesscashdiscounts,freightandtransportation,insurance,tax,installationcost,testfees.2025/3/1482.DepreciationforFixedAssetsWhat?Itisaprocessofallocatingthecostofafixedassetoveritsuseful/servicelife.Why?Thewearandtearonfixedassetsthathavelonglivesexists.Suchcostallocationisdesignedtoproperlymatchexpenseswithrevenues.Scope:Depreciationisrecordedonallfixedassetsexceptland.2025/3/149How?

Severaldepreciationmethods.Effect

Depreciationaffectsthebalancesheetthroughaccumulateddepreciationandincomestatementthroughdepreciationexpense2025/3/1410(1)FactorsDeterminingDepreciationCostUsefulLifeSalvageValue123Estimateofasset’sremainingvaluewhenit

isdisposed.EstimateoftheexpectedservicelifeoftheassetAcquisition

cost2025/3/1411(2)DepreciationMethodsMethodsStraight-linemethodReducing-BalancemethodUnitsofActivitymethodSumoftheyeardigitsmethod2025/3/14121)Straight-linemethodItassumesthatdepreciationhappensevenlythroughouttheservice/usefullifeoftheasset.Sounderthismethod,equalamountofdepreciationinexpensedeachyearduringtheasset’susefullife.2025/3/1413ExampleAnassethasa$100,000cost,10,000salvagevalue,andafour-yearlife.Amount=(100,000-10,000)/4=22,500DepreciationexpenseAccumulateddepreciationforcurrentyearEndingbalanceofAccumulateddepreciationYear122,50022,50022,500Year222,50022,50045,000Year322,50022,50067,500Year422,50022,50090,000B/SI.S.2025/3/1414Attheendofaccountingperiod:Dr.DepreciationExpense22,500Cr.AccumulatedDepreciation22,5002025/3/1415Thestraight-linemethodisusedcommonlyinpracticeforreasonthat①Itiseasytoapplyand②Itprovidesareasonabletransferofcoststoperiodicexpensewhentheuseoftheassetsisreasonablyuniformthroughouttheservicelifeandtheirdailyusedoesnotaffectproductivity,forexampleofficefurniture,buildings,warehouses,etc.2025/3/14162)Declining-balancemethodThismethodprovidesadecliningperiodicexpenseovertheestimatedusefullifeoftheasset.Itisanaccelerateddepreciationmethodbecauseitresultsinmoredepreciationintheearlieryearsandsmalleramountsinlateryearsthanstraight-linemethod.2025/3/1417DoubleDecliningBalanceiscalculatedpro-ratafromthedateofacquisitionusingtheoriginalcostbaseasthedepreciationcostbaseintheyearofacquisition.Inallsubsequentyearsthecarriedforwardwrittendownvalue[adjustedvalue]isusedasthedepreciationcostbase.Depreciationisaccrueduntilthewritten-downvalueequalsresidualvalue.DoubleDecliningBalanceAnnual%Rate=200%/EffectiveLifeinYears2025/3/1418Anassethasa$100,000cost,10,000salvagevalue,andafour-yearlife.Annual%Rate=200%/4=50%DepreciationexpenseWritten-downvalueAccu.depre.forcurrentyearEndingbalanceofAccu.Depre.Year150,00050,00050,00050,000Year225,00025,00025,00075,000Year312,50012,50012,50087,500Year42,50010,0002,50090,0002025/3/14193)SumoftheYearDigitsThisisanaccelerateddepreciationmethodinwhichtheyeardepreciationchargedecreasesproportionatelyastheremainingusefullife[RUL].Foreachsuccessiveyear,thedepreciableamountismultipliedbyafractioncomprisingtheremainingusefullifeoftheassetdividedbythesumoftheconsecutivedigitscomprisingthoseusefullifeyears.

Annual%Rate=Amount=(Originalcost-Residualvalue)*Annualrate2025/3/1420Anassethasa$100,000cost,10,000salvagevalue,andafour-yearlife.AnnualrateDepreciationexpenseAccu.depre.forcurrentyearEndingbalanceofAccu.Depre.Year140%(4/10)36,00036,00036,000Year23/10(30%)27,00027,00063,000Year32/10(20%)18,00018,00081,000Year41/10(10%)9,0009,00090,0002025/3/1421ComparisonofDepreciationMethods2025/3/14224)UnitsofActivitymethodActivitydepreciationmethodsarenotbasedontime,butonalevelofactivity.Theunitsofactivityallocatethesameamountofdepreciationexpenseforeachunitproducedoreachunitofcapacityusedbytheasset.Itislogicalidealforfactorymachinerywhereproductioncanbemeasuredwithunitsofoutputorintermsofmachinehours,deliveryequipment(milesdriven)andairplanes(hoursinuse).2025/3/1423ExampleAssumeDougMcLoneyDenturepurchasedanairfiltrationsystemthathasalifeof8,000hours.Thefiltercosts$100,000andhasa$10,000salvagevalue.Douganticipatesthatthefilterwillbeused1,000hoursduringthefirstyear,3,000hoursduringthesecond,2,000hoursduringthethird,and2000duringthefourth.2025/3/1424HoursusedDepreciation

expenseAccumulateddepreciationAccumulateddepreciationOnB/SBookvalueatendofyear$100,000(originalcost)Year11,000$11,250$11,25011,250$88,750Year23,000$33,750$33,75045,000$55,000Year32,000$22,500$22,50067,500$32,500Year42,000$22,500$22,50090,000$10,000(scrapvalue)2025/3/14253.DisposalofFixedAssetsCompaniesdisposeofassetsthatarenolongerusefulforthem.Bookvalueoffixedassetmustbedeterminedatthetimeofdisposal.

Bookvalue=OriginalCost–AccumulatedDepreciation2025/3/1426(1)GainonSaleAssumethatJuly1,2007,RadioShacksellsofficefurniturefor$16,000cash.Itsoriginalcostis$60,000andasofJanuary1,2007,hadaccumulateddepreciationof$41,000.Depreciationforthefirstsixmonthsof2007is$8,000.Depreciationentry:

Dr.DepreciationExpenseCr.AccumulatedDepreciation2025/3/1427Costofofficefurniture$60,000Less:Accumulateddepreciation49,000Bookvalueatdateofdisposal11,000Proceedsfromsale16,000Gainondisposalofplantasset$5,000Dr.Cash16,000AccumulatedDepreciation-OfficeFurniture49,000Cr.OfficeFurniture60,000Gainondisposal5,0002025/3/1428(2)LossonSalesAssumethatJuly1,2007,RadioShacksellsofficefurniturefor$9,000cash.Itsoriginalcostis$60,000andasofJanuary1,2007,hadaccumulateddepreciationof$41,000.Depreciationforthefirstsixmonthsof2007is$8,000.2025/3/1429Costofofficefurniture$60,000Less:Accumulateddepreciation49,000Bookvalueatdateofdisposal11,000Proceedsfromsale9,000Lossondisposalofplantasset$2,000Dr.Cash9,000AccumulatedDepreciation-OfficeFurniture49,000Lossondisposal2,000Cr.OfficeFurniture60,0002025/3/1430ⅡIntangibleAssets1.Definition

IntangibleAssetreferstoanassetthatisnotphysicalinnature.Corporateintellectualproperty(itemssuchaspatents,trademarks,copyrights,businessmethodologies),goodwillandbrandrecognitionareallcommonintangibleassetsintoday'smarketplace.Internallydevelopedintangibleassetmaynotappearonthecorporateaccounts.

2025/3/1431Anintangibleassetcanbeclassifiedaseitherindefiniteordefinitedependingonthespecificsofthatasset.Acompan