《Survey of accounting 2th会计学 Carl S.Warren》ch07.pptVIP

Nature of Fixed Assets Purchase price Sales taxes Permits from government agencies Broker’s commissions Title fees Surveying fees Buildings Land Improvements Trees and shrubs Fences Outdoor lighting Concrete sewers and drainage Paved parking areas Sales taxes Freight Installation Repairs (purchase of used equipment) Reconditioning (purchase of used equipment) 1 $24,000 $24,000 $4,400 $19,600 2 24,000 $ 4,400 19,600 4,400 15,200 3 24,000 8,800 15,200 4,400 10,800 4 24,000 13,200 10,800 4,400 6,400 5 24,000 17,600 6,400 4,400 2,000 Discovery Mining Co.Partial Balance SheetDecember 31, 2005 Accum. Book Property, plant, and equipment: Cost Depr. Value Describe the accounting for depletion of natural resources. 3 Learning Objective Natural Resources Depletion is the periodic transferring of the cost of natural resources, such as metal ores and other minerals removed from the earth, to an expense account. Paid $400,000 for the mining rights to a mineral deposit estimated at 1,000,000 tons of ore. During the year, 90,000 tons are mined. Natural Resources Describe the accounting for the disposal of fixed assets. 4 Learning Objective Discarding Fixed Assets An item of equipment acquired at a cost of $25,000 is fully depreciated with no salvage value at December 31, 2004. On February 14, 2005, the equipment is discarded. Discarding Fixed Assets Equipment costing $6,000 is depreciated at an annual straight-line rate of 10%. The Accumulated Depreciation balance related to this equipment is $4,900. The asset is removed from service on March 24. Selling Fixed Assets Equipment is acquired at a cost of $10,000 and is depreciated at an annual straight-line rate of 10%. It is sold for $1,000 cash on October 12 of the eighth year of its use. The balance in Accumulated Depreciation is $7,750. 5 Learning Objective Classify fixed asset costs as either capital expenditures or revenue expenditures. Expenditures to repair or maintain plant assets that do not extend th