1 / 9

10.3 Disposals

10.3 Disposals. Property, Plant, and Equipment. 3 Methods of PPE Disposal. Retirement Equipment is scrapped or discarded Sale Equipment is sold to another party Exchange Existing equipment is traded for new equipment. Net Book Value (NBV). Recall:

nike
Télécharger la présentation

10.3 Disposals

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. 10.3 Disposals Property, Plant, and Equipment

  2. 3 Methods of PPE Disposal • Retirement • Equipment is scrapped or discarded • Sale • Equipment is sold to another party • Exchange • Existing equipment is traded for new equipment

  3. Net Book Value (NBV) • Recall: NBV = Asset Cost – Accumulated Amortization • Must calculate amortization for partial year to date • Eg. Disposed of equipment on April 1st (must calculate 3 months of amortization (3/12) for January to March)

  4. Retirement • Eg. Celino Inc. retires its computer printers, which cost $32,000 on Aug. 8. The accumulated amortization of the printers is $32,000. Aug 8 Accum. Amort – Print. Equip. 32,000 Printing Equip. 32,000 • Accumulated Amortization is always less than or equal to total cost

  5. Loss on Disposal Gain (Loss) • Retirement prior to full amortization (loss is expense) Aug 8 Accum. Amort – Deliv. Equip. 24,000 Loss on Disposal 4,000 Delivery Equip. 28,000 Net Book Value Net Book Value Proceeds Proceeds Proceeds = - - - $ 0 - $4,000 = ($4,000) ($28,000 - $24,000)

  6. Sale Gain (Loss) Proceeds > NBV ** Gain on Disposal CR Proceeds < NBV ** Loss on Disposal DR Net Book Value Net Book Value Proceeds Proceeds Proceeds = - - -

  7. Gain on Disposal Example • On July 1st 2008 Celino Inc sells office furniture for $16,000 cash. The furniture originally cost $60,000. As at January 1st 2008 it had accumulated amortization of $41,000. Amortization for the first six months of 2008 is $8000. Record the necessary journal entries(s).

  8. Gain on Disposal Jul 1 Amortization Expense 8,000 Accumulated Amortization 8,000 to record amortization expense for 2008 * updated Accum. Amort. Bal = $49,000 (Cal: 41 + 8) Jul 1 Cash 16,000 Accumulated Amortization 49,000 Office Furniture 60,000 Gain on Disposal 5,000 to record sale of office furniture at a gain

  9. Exchange • A new asset is typically purchased by trading in an old asset, on which a trade-in allowance is given towards the purchase of the new asset

More Related