Kế toán doanh nghiệp - Chapter 8: Reporting and interpreting property, plant, and equipment; intangibles; and natural resources
Land Assets subject to depreciation Buildings and equipment Furniture and fixtures Natural resource assets subject to depletion Mineral deposits and timber Definite life Patents Copyrights Franchises Indefinite life Trademarks Goodwill
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Chapter 8Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.TangiblePhysical SubstanceIntangibleNo Physical SubstanceClassifying Long-Lived Assets Land Assets subject to depreciation Buildings and equipment Furniture and fixtures Natural resource assets subject to depletion Mineral deposits and timber Definite life Patents Copyrights Franchises Indefinite life Trademarks Goodwill8-2Measuring and Recording Acquisition CostAcquisition cost includes the purchase price and all expenditures needed to prepare the asset for its intended use.Acquisition cost does not include financing charges and cash discounts.BuildingsPurchase priceRenovation and repair costsLegal and realty feesTitle fees8-3Measuring and Recording Acquisition CostEquipmentPurchase priceInstallation costsModification to building necessary to install equipmentTransportation costsLandPurchase priceReal estate commissionsTitle insurance premiumsDelinquent taxesSurveying feesTitle search and transfer feesLand is not depreciated8-4Acquisition by ConstructionAsset cost includes:All materials and labor traceable to the construction.A reasonable amount of overhead.Interest on debt incurred during the construction.8-5Repairs, Maintenance, and improvements8-6Repairs, Maintenance, and improvementsTo aid with the capitalize/expense decision, many companies record all expenditures below a certain dollar amount as expenses.8-7Depreciation is the process of allocating the cost of buildings and equipment over their productive lives using a systematic and rational method. CostAllocation(Unused)Balance Sheet(Used)Income StatementExpenseDepreciation ConceptsAcquisitionCostDepreciation ExpenseIncome StatementBalance SheetAccumulated DepreciationDepreciation for the current yearTotal depreciation to date on an asset8-8Depreciation ConceptsThe calculation of depreciation requires three amounts for each asset: Acquisition cost. Estimated useful life. Estimated residual value.Alternative depreciation methods: Straight-line Units-of-production Accelerated Method: Declining balance8-9Measuring Asset ImpairmentImpairment is the loss of a significant portion of the utility of an asset through . . .Casualty.Obsolescence.Lack of demand for the asset’s services.Recognize a loss when an asset suffers a permanent impairment. 8-10Disposal of Property, Plant and EquipmentVoluntary disposals: SaleTrade-inRetirementInvoluntary disposals:Fire AccidentDisposal of Property, Plant and Equipment8-11 Journalize disposal by:Writing off accumulated depreciation (debit).Writing off the asset cost (credit).Recording cash received (debit)or paid (credit).Recording a gain (credit)or loss (debit). Update depreciation to the date of disposal.Disposal of Property, Plant and Equipment8-12Acquisition and Amortization of Intangible AssetsNoncurrent assets without physical substance.Useful life is often difficult to determine.Usually acquired for operational use. Often provide exclusive rights or privileges.Intangible Assets Only purchased intangibles are recorded, and they are normally recorded at current cash equivalent cost, including purchase price, legal fees, and filing fees.8-13Acquisition and Amortization of Intangible AssetsDefinite Life Amortize over shorter of economic life or legal life. Use straight-line method.Indefinite LifeNot amortized.Tested at least annually for possible impairment, and book value is reduced to fair value if impaired.Amortization is a cost allocation process similar to depreciation and depletion.8-14Occurs when one company buys another company.The amount by which the purchase price exceeds the fair market value of net assets acquired.Only purchased goodwill is an intangible asset.GoodwillAcquisition and Amortization of Intangible AssetsGoodwill is not amortized. Its value must be reviewed at least annually for possible impairment, and the book value is reduced to fair value if impaired. 8-15Acquisition and Depletion of Natural ResourcesExamples: oil, coal, goldExtracted from the natural environment.A noncurrent asset presented at cost less accumulated depletion.Total cost of asset is the cost of acquisition, exploration, and development.Total cost is allocated over periods benefited by means of depletion.Depletion is like units-of-production depreciation.8-16The unit depletion rate is calculated as follows:Estimated Recoverable Units Acquisition and Residual Development Cost Value– Depletion costInventory for saleUnsold InventoryCost of goods soldDepletion cost for a period is:UNIT DEPLETIONRATENUMBER OF UNITSEXTRACTED IN PERIOD×Acquisition and Depletion of Natural Resources8-17End of Chapter 88-18
