NOTE3 Simple Adjustment Financial account 财务会计 教学课件.ppt

Accrual Basis vs. Cash Basis 权责发生制和收付实现制 Cash Basis Accrual Basis Recognizing Revenues and Expenses Revenue Recognition Recognizing Revenues and Expenses Revenue Recognition Matching Adjusting Accounts Adjusting Prepaid (Deferred) Expenses Prepaid Insurance On December 1, 2004, Scott Company paid $12,000 to cover rent for December 2004 through May 2005. Scott recorded the expenditure as Prepaid Insurance on December 1. What adjustment is required? Supplies During 2004, Scott Company purchase $15,500 of supplies. Scott recorded the expenditures as Supplies. At December 31, a count of the supplies indicated $2,655 on hand. What adjustment is required? Adjusting for Depreciation Cost Determination Land Buildings Machinery and Equipment Depreciation Factors in Computing Depreciation The calculation of depreciation requires three amounts for each asset: Cost. Salvage Value. Useful Life. Depreciation Methods Straight-line Units-of-production Declining balance Straight-Line Method On January 1, 2004, equipment was purchased for $50,000 cash. The equipment has an estimated useful life of 5 years and an estimated residual value of $5,000. Straight-Line Method Straight-Line Method Units-of-Production Method Units-of-Production Method On December 31, 2001, equipment was purchased for $50,000 cash. The equipment is expected to produce 100,000 units during its useful life and has an estimated salvage value of $5,000.If 22,000 units were produced in 2002, what is the amount of depreciation expense? Units-of-Production Method Units-of-Production Method Declining Balance Method Declining Balance Method Declining-Balance Method Declining-Balance Method Comparing Depreciation Methods Adjusting for Depreciation On January 1, 2004, Barton, Inc. purchased equipment for $62,000 cash. The equipment has an estimated useful life of 5 years and Barton expects to sell the equipment at the end of its life for $2,000 cash. Let’s record depreciation expense for the year ended