会计学ch10.pptVIP

Plant Assets and Intangibles Chapter 10 Plant Assets Objective 1 Cost Principle Land and Land Improvements Land Improvements All improvements located on the land but subject to decay: Buildings – Construction Buildings – Purchasing Machinery and Equipment Lump-Sum Purchases Example Andrea Ortiz paid $110,000 for a combined purchase of land and a building. The land is appraised at $90,000 and the building at $60,000. How much of the purchase price is allocated to land and how much to the building? Lump-Sum Purchases Example Distinction Between Capital and Revenue Expenditures Measuring the Depreciationof Plant Assets Objective 2 Depreciation Methods Depreciation Methods Example Donishia and Richard Catering, Inc., purchased a delivery van on January 1, 200x, for $22,000. The company expects the van to have a trade-in value of $2,000 at the end of its useful life. The van has an estimated service life of 100,000 miles or 4 years. Straight-Line Method Example Units-of-ProductionMethod Example Double-Declining-Balance Method Example Straight-line rate is 100% ÷ 4 = 25% Double-declining-balance = 2 times the straight-line rate = 50% What is the book value of the van at the end of the first year? $22,000 × 50% = $11,000 $22,000 – $11,000 = $11,000 Double-Declining-Balance Method Example Depreciation Methods Comparison Use of Depreciation Methods Objective 3 Relationship Between Depreciation and Taxes MACRS was created by the Tax Reform Act of 1986. It is an accelerated method used for depreciating equipment. Depreciation for Partial Years Assume that Donishia and Richard Catering, Inc., owned the van for 3 months. How much is the van’s depreciation? Revising Depreciation Rates Objective 4 Disposing of Plant Assets selling exchanging discarding (scrapping it) Gain/loss is reported on the income statement... and closed to Income Summary. Disposing by Discarding Example On September 1, Joe, manager of Joe’s Landscaping, is contemplating the disposal of an old piece of e