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23 Cards in this Set
- Front
- Back
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Disposal of Plant Assets
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1. Junk, discard (loss)
2. Sell for cash (gain/loss) BV vs FMV 3. Exchange |
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Exchange Types
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1. Has commerical substance (gain/loss) - disimilar
2. Lacks commercial substance (loss) - similar -some cash (gain) |
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P.P.E.
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-use in operations
-not for resale -long term in nature -usually depreciate -physical substance |
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Land Costs Include
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-purchase price
-closing costs -costs incurred when getting land ready |
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3 Conditions to Capitalize
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-useful life increase
-quantity of units produced increase -quality of units produced increase |
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Major Expenditures
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-additions
-improvements -replacements -rearrangments -reinstallation -repairs |
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Expenses
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-ordinary repairs
-replace minor broken parts on a machine -repaint entire plant |
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Captialize
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-improvements
-series of major repairs for rotting -electrical system updated -roof with asbestos slates was removed and replaced with wood shingles -company increase plant capacity by building a new addition -improve exisiting maching to increase FMV |
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Land Improvements
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-install fences around property
-cost of parking lots and driveways -part of land that doesn't last forever |
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Machinery
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-purchase of machine
-freight on machinery -installation of machinery |
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Other Accounts
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-storage of machinery and hauling from storage
-discount not taken -money borrowed on a note |
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Land
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-cost to purchase land
-cost of land fill and clearing -deliquent real estate taxes -commission paid to real estate agency -cost of removing building and proceeds of salvage -cost of permenant tree/shrub -title insurance -assessment -legal fees for title investigation |
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Building
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-payment for construction
-premium on 6-monyh insurance policy -architect's fees -interest paid during construction on money borrowed -excavation costs -land survey to engineer and factory drawings -contractors charges -new building constructed |
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Straight Line
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(cost-salvage value)/estmated useful life
-years -good for buildings |
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Activity-Production
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(cost-salvage value)/estimated useful life
-miles, units, etc. -good for machinery -applicable for usage |
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Sum-Of-The-Years-Digits
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(cost-salvage value)x changing fraction
changing fraction = (n(n+1))/2 -accelerates depreciation |
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Double Declining Balance
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book value x same fraction
ex. 10 years 1/10 x 2/1 = 2/10 = 1/5 = 20% |
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Balance of Accumulated Depreciation
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all years depreciation added up
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Book Value
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original cost - accum deprec
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MACRS
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modified accelerated cost recovery system
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Asset Turnover
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net sales / average asset = times
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Rate of Return on Assets
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net income / average asset = percent
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Profit Margin on Sales
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net income / net sales = percent
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