财务会计Plant Assets and Depreciation推荐.ppt

Plant Assets Major Categories of Plant Assets Accountable Events Acquisition. Allocation of the acquisition cost to expense over the asset抯 useful life (depreciation). Sale or disposal. Acquisition of Plant Assets Determining CostExample On May 4, Heat Co., an Ohio maker of stoves, buys a new machine from a Texas company. The new machine has a price of $52,000. Sales tax was computed at 8%. Heat Co. pays $500 shipping cost to get the machine to Ohio. After the machine arrives, set-up costs of $1,300 are incurred, along with $4,000 in testing costs. Compute the cost of Heat Co.’s new machine. Determining CostExample Determining CostExample Special Considerations Special Considerations Special Considerations Special Considerations Special Considerations Capital Expenditures and Revenue Expenditures Depreciation Depreciation Book Value Cost - Accumulated Depreciation Accumulated Depreciation Contra-asset Represents the portion of an asset抯 cost that has already been allocated to expense. Causes of Depreciation Physical deterioration Obsolescence Straight-Line Depreciation Straight-Line MethodExample Straight-Line MethodExample Straight-Line MethodExample Straight-Line MethodGraph of Depreciation Expense Depreciation for Fractional Periods Half-Year ConventionExample Using the half-year convention, calculate the straight-line depreciation on December 31, 1999, for equipment purchased in 1999. The equipment cost $75,000, has a useful life of 10 years and an estimated salvage value of $5,000. Half-Year ConventionExample Using the half-year convention, calculate the straight-line depreciation on December 31, 1999, for equipment purchased in 1999. The equipment cost $75,000, has a useful life of 10 years and an estimated salvage value of $5,000. Declining-Balance Method Double-Declining BalanceExample Double-Declining BalanceExample Double-Declining BalanceExample Double-Declining BalanceExample Double-Declining BalanceGraph of Depreciation Expense Deprec