西方财务会计_chapter8

1Chapter8PLANTASSETS2INTRODUCTIONNoncurrenttangibleassets.Acquiredforuseintheoperationofthebusiness.Theaccountsthatmakeupplantassetsappearonthebalancesheetaftercurrentassetsandlong-terminvestments.Othertitlesforplantassetsarefixedassets;propertyandequipment;andproperty,plant,andequipment.Plantassetsshouldbeexpectedtolastformorethanoneaccountingperiod.Plantassetsareusuallydepreciablepropertyexceptforland.Examples:land,buildings,officemachines……3AccountingforplantassetsAcquisitionDisposal(discard,sell,exchange)Depreciation4ValuationofplantassetsatacquisitionForonepiece:reasonableandnecessaryexpenditureForlump-sumpurchase:allocatingtothevariousassetspurchasedaccordingtheirfairmarketvalue.Plantassetscanbeacquiredwithlong-termnotespayable.(Insuchcase,assetsarerecordedatthepresentvalueoftheconsiderationexchanged)5AssetAcquisition:onepieceAssetprice...forgettingtheassettothedesiredlocation....forgettingtheassetreadyforuse.Cost=Reasonableandnecessarycosts...+6DeterminingCostOnMay4,HeatCo.,anOhiomakerofstoves,buysanewmachinefromaTexascompany.Thenewmachinehasapriceof$52,000.Salestaxwascomputedat8%.HeatCo.pays$500shippingcosttogetthemachinetoOhio.Afterthemachinearrives,set-upcostsof$1,300areincurred,alongwith$4,000intestingcosts.ComputethecostofHeatCo.’snewmachine.7DeterminingCostListprice52,000$Salestax@8%4,160Transportationcost500Set-up1,300Testing4,000TotalcosttoHeatCo.61,960$DateDescriptionDebitCreditMay4NewMachine61,960Cash61,9608Lump-Sum(orBasket)PurchasesofAssetsBasketPurchaseThepurchaseoftwoormoreassetsacquiredtogetheratasingleprice.RelativeMarketValuationAwayofallocatingabasketpurchasepricetotheindividualassetsacquiredbasedontheirrespectivemarketvalues.(example:page166)9AcquisitionofplantassetswithnotepayableInsuchsituation,inordertobeinaccordancewiththecostprinciple,therecordedcostofanassetpurchasedoncreditisbasedononeofthefollowing,whicheverismoreobjectiveandreliable:(1)thecashequivalentprice(marketvalue)and(2)thepresentvalueofthefuturecashpaymentsrequiredbythedebtagreementdiscountedattheprevailing(market)interestrateforthattypeofdebt.10AcquisitionofplantassetswithnotepayableExample:onMay1,2003,Fesler,Inc.purchasedequipmentpaying$3000downandissuinganotepayable.Thenoterequiredfourannualpaymentsof$2500withthefirstpaymentdueonMay1,2004.Thenoteisnoninterest-bearing.Theprevailingmarketrateofinterestonnotesofthiskindis12%.PreparetherequiredjournalentriesonMay1,2003(year-end).Theusefullifeoftheequipmentwasestimated10yearsandnosalvagevalue.11AcquisitionofplantassetswithnotepayableAnnuitypayment$2500PVA$1,n=4,I=12%3.03735PVofnote(rounded)$7593Downpayment3000Costofequipment$105935/1Equipment10593DiscountonNotepayable2407Cash3000Notespayable1000012/31interestexpense607DiscountonNotepayable607($7593*12%*8/12=$607)Depreciationexp.706Accu.Depr.706($10593*1/10*8/12=706)DiscardSellformonetaryconsiderationExchangefornoncashassetsDisposalofPlantAssets$13AccountingforDisposalofPlantAssets:discardFixturescost:$4,000Accumulateddepreciation:$3,000Bookvalue$1,000AccumulatedDepreciation3,000LossonDisposal1,000StoreFixtures4,000Todisposeofstorefixtures14SellingaPlantAssetForbookvalue:nogainorloss(example1)Abovebookvalue:againisrecorded(example2)Belowbookvalue:alossisrecorded(example3)15ForstudentsOnSeptember30,2005,EvansMapCompanysellsamachinethatoriginallycost$100,000for$60,000cash.ThemachinewasplacedinserviceonJanuary1,2000.Ithasbeendepreciatedusingthestraight-linemethodwithanestimatedsalvagevalueof$20,000andanestimatedusefullifeof10years.Let’sanswerthefollowingquestions.16TheamountofdepreciationrecordedonSeptember30,2005,tobringdepreciationuptodateis:a.$8,000.b.$6,000.c.$4,000.d.$2,000.AnnualDepreciation:($100,000-$20,000)÷10Yrs=$8,000DepreciationtoSept.30:9/12×$8,000=$6,00017Afterupdatingthedepreciation,themachine’sbookvalueonSeptember30,2005,is:a.$54,000.b.$46,000.c.$40,000.d.$60,000.Cost100,000$AccumulatedDepreciation:(5yrs.?$8,000)+$6,000=46,000BookValue54,000$18Themachine’ssaleresultedin:a.againof$6,000.b.againof$4,000.c.alossof$6,000.d.alossof$4,000.Cost100,000$Accum.Depr.46,000Bookvalue54,000$Cashreceived60,000Gain6,000$19DateDescriptionDebitCreditDateDescriptionDebitCreditSept.30Cash60,000AccumulatedDepreciation46,000GainonSale6,000Machinery100,000Preparethejournalentrytorecordthesale.20NonmonetaryTransactions(Exchanges)Thetypesofnonmonetaryexchangeswewillbelookingatareasfollows:DissimilarexchangesSimilarexchanges•Lossinvolved,noboot(cash)Lossinvolved,bootpaidbyyou•Lossinvolved,bootreceivedbyyou•Gaininvolved,nobootGaininvolved,bootpaidbyyouGaininvolvedbootreceivedbyyou21ExchangesofPlantAssetsTypesofAccountingRationaleExchangeGuidanceDissimilarRecognizegainEarningsprocessassetsandlossesiscompleteSimilarRecognizeloss;Earningsprocessassets(cashispartiallyreceivedpartialgaincompleteSimilarRecognizeloss;Earningsprocessassets(NoDefergainisnotcompletecashreceived)22ExchangesofsimilarAssetsExample:Landforland,truckfortruck,etc.Inthiscasebuton-going.LossesshouldalwaysberecordedaccordingtoConservatismprin