Ch.8 Flashcards
(19 cards)
Land
Not depreciated, unlimited life, cost include real estate fees, clearing, etc.
Land Improvements
Additions to land. Ex. Parking lots
Change in Estimate
Book value(beg. year of change)- Revised S.V / Revised Remaining Useful Life
Asset Turnover Ratio
Net Sales
/ Avg. Total Assets
Straight-Line Depreciation
Cost - Salvage Value
/ Useful life
Same every year
Double-Declining-Balance Depreciation
- 100% / useful years = %
- Double % from step 1
- % from Step 2 x beg. Book value
Book Value
Cost - Accumulated Depreciation
*after useful life book value will be S.V
Units of Production Depreciation
- Cost - Salvage Value
/ total units = dep. per unit - X units produced in period
Lump Sum Purchases
- Plant assets purchased as group
- allocate cost on appraised value
- add all appraised values & divide each asset to find %
cost X % = apportioned cost
Partial Year depreciation
DATES!!!! CLOSEST TO THE 1st
Straight line X fraction of year left. Starting on beg of month closest to 1st !
Ordinary Repairs
- Does not increase life or productivity
- debit repairs expense
Betterments/ Extraordinary Repairs
- increase efficiency & useful life
- Debit plant asset
Discarding Assets
- before discarding, bring depreciation up to date
- fully depreciated: Debit A/D, Credit Asset
- partially depreciated: Debit A/D & Loss on disposal(book value), Credit Plant asset
Depletion
-for natural resources
Cost-Salv Value/total units
x units in period
Intangible Assets
Non physical assets
Used in operations
Intangible Assets Examples
Patent (20yrs) Copyright (life+70yrs) Franchise & licenses -life Trademark -life Leasehold&improvements - life
Goodwill
Intangible asset NOT Amortized
Amortization
Cost/useful life (legal life)
Selling Assets
- Cash = book value
No gain no loss - Cash greater than book value (GAIN-credit)
- Cash less than book value (LOSS- debit)
