1 / 44

Module 8

Module 8. Capital Assets/Fixed Assets. Learning Objectives. Capital Assets. Tangible Capital Assets. InTangible Capital Assets. Cost of Capital Assets. Capital Expenditures. Revenue Expenditures. Betterments. Land. Land Improvements. Buildings. Leasehold Improvements.

sol
Télécharger la présentation

Module 8

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. Module 8 Capital Assets/Fixed Assets

  2. Learning Objectives

  3. Capital Assets

  4. Tangible Capital Assets

  5. InTangible Capital Assets

  6. Cost of Capital Assets

  7. Capital Expenditures

  8. Revenue Expenditures

  9. Betterments

  10. Land

  11. Land Improvements

  12. Buildings

  13. Leasehold Improvements

  14. Machinery and Equipment

  15. Amortization

  16. Amortization Cost Useful life

  17. Amortization

  18. Amortization Methods

  19. Straight Line Method Straight-line amortization expense Cost – Estimated salvage value = Estimated useful life

  20. Example A piece of shoe-inspection machinery is purchased on January 1, 2008. The relevant data is as follows: Cost $10,000 Estimated salvage value 1,000 Cost to be amortized $9,000 Estimated useful life: Accounting periods 5 years Units inspected 36,000 shoes

  21. Example: Straight-Line Method Straight-line amortization expense Cost – Estimated salvage value = Estimated useful life $10,000 – $1,000 = 5 years = $1,800/ year

  22. Example: Straight-Line Method The annual adjusting entry to record amortization on this equipment would be: Amortization Expense, equipment 1,800 Accumulated Amortization, –equipment 1,800

  23. Units-of-Production Method Amortization per unit Cost – Estimated salvage value = Total estimated units of production Annual amortization expense Actual production Amortization per unit = x

  24. Example: Units-of-Production Method $10,000 – $1,000 Amortization per unit (shoe) = 36,000 units (shoes) = $.25/shoe Assume actual production is as follows: 2008 2009 2010 2011 2012 Units (shoes) 7,000 8,000 9,000 7,000 6,000 x.25 x.25 x.25 x.25 x.25 Amortization $1,750 $2,000 $2,250 $1,750 $1,250* *Maximum amortization allowed since 36,000 units have been produced.

  25. Example: Straight-Line Method

  26. Declining Balance Method

  27. Double-Declining-Balance Method

  28. Example: Double-Declining-Balance Method Rate = 2 / 5 years x 100% = 40% per year

  29. Example: Double-Declining-Balance Method

  30. Comparison of Methods- Amortization Expense

  31. Partial Year Amortization

  32. Partial Year Amortization

  33. Revising Amortization Rates

  34. Changes in Estimated Useful Life and/or Estimated Salvage Value

  35. Changes in Estimated Useful Life and/or Estimated Salvage Value • Example: Straight-line Method Revised amortization for remaining years Remaining book value Revised salvage value = Revised remaining useful life

  36. Disposal of Capital Assets

  37. Disposal of Capital Assets

  38. Natural Resources

  39. Natural Resources Natural resources are amortized based on units extracted or depleted. Amortization per unit Cost – Estimated salvage value = Total units of capacity Amortization expense Units extracted Amortization per unit = x

  40. Intangible Assets

  41. Intangible Assets

  42. Goodwill

  43. Exchanging Dissimilar and Similar Assets

  44. Exchanging Dissimilar and Similar Assets

More Related