Bài giảng môn Kế toán, kiểm toán - Chapter 6: Accounting for and presentation of property, plant, and equipment, and other noncurrent assets

© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.Chapter 6Accounting for and Presentation of Property, Plant, and Equipment, and Other Noncurrent AssetsPowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPALandEquipmentBuildingsIntangible AssetsNatural Resources1) Classified as assets because they are owned by the organization.2) Have the ability to generate revenue beyond one year.Noncurrent Assets6-3Decline in asset value over its useful lifeAcquisitionAccounting for acquisition of the asset.UseAccounting for depreciation of the asset.Accounting for maintenance and repair costs.DisposalAccounting for the disposition of the asset.Primary Issues for Noncurrent Assets6-4Land is a non-depreciable asset.PurchasepriceReal estatecommissionsTitle insurance premiumsDelinquenttaxesRazing costs of building on the landTitle and legal feesAll costs incurred to get land ready for use are capitalized.LO 1Land6-5PurchasepriceArchitecturalfeesExcavation andconstruction costsInstallationcostsTransportationcostsAll costs incurred to get an asset ready for use are capitalized.LO 1Buildings and Equipment6-6 CostAllocationAcquisitionCost(Unused)Balance Sheet(Used)Income StatementExpenseDoes not reflect decline in value.LO 2Depreciation6-7In the early years of an asset’s life, accelerated depreciation methods result in greater depreciation expense and lower net income than straight-line depreciation.LO 3Depreciation Methods6-8Life in YearsAnnualDepreciationStraight-LineLife in YearsAnnualDepreciationUnits-of-ProductionLife in YearsAnnualDepreciationDouble-Declining-BalanceTotal depreciation at end of useful life will be the same regardless of depreciation methodLO 3Comparing Depreciation Methods6-9Preventative maintenance expenditures and routine repair costs are clearly expenses of the period in which they are incurred.LO 5Maintenance and Repair Expense6-10Recording cashreceived (debit).Removing accumulateddepreciation (debit). Update depreciation to the date of disposal.Removing the asset cost (credit).Recording again (credit)or loss (debit).Disposal of Depreciable AssetsLO 6 Journalize disposal by:6-11An operating lease is an ordinary lease for the use of an asset that does not involve any attributes of ownership.A capital lease results in the lessee (renter) assuming virtually all of the benefits and risks of ownership for the leased asset.Assets Acquired by Capital LeaseLO 76-12IntangibleAssetsIntangible AssetsNoncurrent assetswithout physicalsubstance.Often provideexclusive rightsor privileges.Useful life isoften difficultto determine.Usually acquired for operational use. LO 96-13Only ‘purchased’ goodwill is an intangible asset.Occurs when onecompany buysanother company.The amount by which thepurchase price exceeds the fairmarket value of net assets acquired.GoodwillGoodwillLO 96-14Total cost,including exploration anddevelopment,is charged todepletion expenseover periodsbenefited.Examples: oil, coal, goldExtracted fromthe naturalenvironmentand reportedat cost lessaccumulateddepletion.Natural ResourcesLO 96-15Present Value: the value now of an amount to be received or paid at some future date. Future Value: the value at some future date of an investment made today. Today 1 year 2 years 3 years 4 years$ 1,000Invested at 10% has a future value of$ 1,464Today 1 year 2 years 3 years 4 years$ 1,000Is the present value at 10% of$ 1,464LO 10Time Value of Money6-16End of Chapter 66-17