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10 Cards in this Set
- Front
- Back
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Distinguish between land and land improvements.
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Land includes the cost of earth surface owned by hospital
Land improvements consist of cost of land-scapping, sewage, roadways, parking |
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Distinguish between fixed equipment and major movable equipment.
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Fixed equitment is the cost of equipment that is affixed to, and constitutes a structural component of the hospital building: Generators, pumps, boilers
Major movable is readily moved, cost sufficiently large and minimum of 3 years of useful life: Desks, chairs, beds |
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Describe briefly the proper accounting procedure for minor equipment.
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Only the cost of the original supply of minor equipment should be charged
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List five items that generally should be included in the cost of purchased equipment.
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Billed price, freight charges, sales taxes, fees paid, installation costs
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What are the advantages of maintaining a detailed subsidiary ledger for plant assets?
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Periodic depreciation charges, balance sheet valuations, provides basis for insurance claims / coverage, assists in securing plant asset investments
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How is each of the following determined?
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(a) Depreciable cost: Cost minus its estimated salvage value
(b) Useful life: Plant asset retirement policy (c) Salvage value: Expected future market conditions |
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"Depreciation expense is a measure of the decline in the value of plant assets during an accounting period" Do you agree?
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Yes; depreciation is a measure of the "wearing out" process of plant assets
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Distinguish briefly between the group depreciation method and the composite rate depreciation method.
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Group depreciation is a number of similar plant assets depreciated as a single unit
Composite depreciation is a number of dissimilar assets depreciated as a single unit |
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What is meant by "funding" depreciation? What entry is made to record the funding of, say, $79,000 of depreciation?
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Cash resources are set aside periodically for the purpose of financing the renewal or replacement of assets
Board-Designated Assets$79,000 Cash-General Checking$79,000 |
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Summarize briefly the accounting procedure to be followed when an existing item of equipment having a book value of $40,000 and a fair market value of $45,000 is traded, along with $13,000 cash, for a new item of equipment having a list price of $60,000.
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General rule is that the "cost" of an asset received in an exchange is the fair market value of the asset given up or recieved
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