会计课件PPTHHTS9e-Ch07-GE

Chapter7PPEandIntangiblesTypesofNon-currentAssets2Copyright©2014PearsonEducation.Plant,PropertyandEquipment(PPE)ConstructioninProgressIntangiblesInvestmentPropertiesPPE&IntangiblesTerminologyAssetAccount(BalanceSheet)RelatedExpenseAccount(IncomeStatement)Property,PlantandEquipmentFreeholdLandNoneLeaseholdlandDepreciationBuildings,Machinery&EquipmentDepreciationFurniture&FixturesDepreciationLandImprovementsDepreciationNaturalResourcesDepletionIntangiblesIntangibleswithfiniteusefullivesAmortizationIntangibleswithindefiniteusefullivesNone3Copyright©2014PearsonEducation.DeterminethecostofaPPEandaccountfordepreciation4Copyright©2014PearsonEducation.MeasuringtheCostofaPPE5Copyright©2014PearsonEducation.6Copyright©2014PearsonEducation.AssetCostsincludedLandPurchaseprice,commissions,survey&legalfees,andbackpropertytaxespaid;gradingandremovingunwantedbuildingsLandImprovementsFencing,paving,securitysystems&lightingBuilding–ConstructedArchitecturalfees,contractors’charges,materials,labor,andoverhead;interestonfundsborrowedBuilding–PurchasedPurchaseprice,broker’scommission,taxespaidandallcoststorepairandrenovatebuildingEquipmentPurchaseprice,transportation,insuranceintransit,saletax,installationandtestingLump-Sum(Basket)Purchases•Severalassetspurchasedinagroupatoneprice•Totalcostisallocatedbasedontheirmarketvalues7Copyright©2014PearsonEducation.AssetMarketvalueTotalmarketvalue%oftotalmarketvalueTotalcostCostofeachassetLand$300,000$3,000,00010%$2,800,000$280,000Building$2,700,000$3,000,00090%$2,800,000$2,520,000Total$3,000,000100%$2,800,000==CAPITALEXPENDITURESEXPENSES•Increasecapacityorextendusefullife•Costisaddedtoanassetaccount•Donotextendcapacityorusefullife•Maintainorrestoreworkingorder•Costisrecordedasanexpense8Copyright©2014PearsonEducation.DistinctionbetweenthetworequiresjudgmentSubsequentCostsDepreciation•Systematicallocationofcostofanassetoveritslife▫ChargedtoIncomeStatement▫CumulativeamountchargediscalledAccumulatedDepreciation•Supportsmatchingprinciple9Copyright©2014PearsonEducation.DepreciationisNOT:10Copyright©2014PearsonEducation.AfundtoreplaceassetsValuationprocessAmountsNeededforDepreciationCostUsefullifeResidualvalue11Copyright©2014PearsonEducation.12Copyright©2014PearsonEducation.AssetcostResidualvalueDepreciableamountDepreciationMethodsCopyright©2014PearsonEducation.13Straight-lineUnits-of-productionDouble-declining-balanceStraight-Line(SL)Copyright©2014PearsonEducation.14DepreciablecostUsefullife,inyearsResultsinequalamountofexpenseeachyearCopyright©2014PearsonEducation.15AccumulateddepreciationincreasesBookvaluedecreasesAsset’sfinalbookvalue=ResidualvalueUnits-of-Production(UOP)Copyright©2014PearsonEducation.16DepreciablecostUsefullifeinunitsDepreciationperunitDepreciationperunitActivityforperiod(units,miles)Double-Declining-Balance(DDB)Copyright©2014PearsonEducation.17DDBrateBookvalueStraight-lineratex2(or2/lifeinyears)CostminusaccumulateddepreciationResidualValue:DDB18Copyright©2014PearsonEducation.IgnoreduntilfinalyearFinalyeardepreciationBookvalueatthebeginningfinalyearResidualvalueDDBdifferences•First-yeardepreciationisbasedonasset’sfullcost•Finalyeardepreciationisa“plug”amountneededtoreducebookvaluetoresidualvalue19Copyright©2014PearsonEducation.Copyright©2014PearsonEducation.20$-$2,000$4,000$6,000$8,000$10,000$12,000$14,000$16,000$18,00012345DepreciationMethodsS/LUOPDDBComparingDepreciationMethodsChoosingDepreciationMethodsStraight-line•Bestforassetsthatgeneraterevenueevenly•BestmeetsmatchingprincipleUnits-of-production•BestforassetsthatwearoutbecauseofuseDouble-declining-balance•Bestforassetsthatgeneraterevenueearlyinusefullife21Copyright©2014PearsonEducation.DepreciationMethodsUsedby170IFRSCompanies22Copyright©2010PearsonEducationInc.PublishingasPrenticeHall.Exercise7-19ACopyright©2014PearsonEducation.23Straight-lineDepreciablecostUsefullife,inyears$19,000-$2,8004years$4,050depreciationexpenseperyearExercise7-19ACopyright©2014PearsonEducation.24DepreciablecostUsefullifeinunitsDepreciationperunitUnits-of-production$19,000-$2,80036,000miles$0.45permileCopyright©2014PearsonEducation.25DepreciationperunitActivityforperiod(units,miles)Exercise7-19AUnits-of-production$0.45permileMilesDepreciationexpense11,000$4,95013,000$5,8505,000$2,2507,000$3,150Exercise7-19ACopyright©2014PearsonEducation.26DDBrate2/Lifeinyears2/4years50%YearBookvalueDepr.Exp.Accum.Depr.Bookvalue119,0009,5009,5009,50029,5004,75014,2504,75034,7502,37516,6252,375Lessthanresidualvalue2,8001,95016,200Double-declining-balanceUnderstandadditionalissuesrelatedtoaccountingforPPE27Copyright©2014PearsonEducation.IssuesinAccountingforPPECopyright©2014PearsonEducation.28IncometaxesaffectedbydepreciationLonglivesAlternativesubsequentmeasurementmodelsGainandlossesondisposalofPPEDepreciationforTaxPurposesCopyright©2014PearsonEducation.29TaxsavingscanbereinvestedinbusinessTaxdeductionsdecreasetaxpaymentsAccelerateddeprecationprovidesfastesttaxdeductionsPartialYearDepreciationCopyright©2014PearsonEducation.30AnnualdepreciationMonthsfromdateofp