10 3 disposals
Download
1 / 9

10.3 Disposals - PowerPoint PPT Presentation


  • 439 Views
  • Uploaded on

10.3 Disposals Property, Plant, and Equipment 3 Methods of PPE Disposal Retirement Equipment is scrapped or discarded Sale Equipment is sold to another party Exchange Existing equipment is traded for new equipment Net Book Value (NBV) Recall:

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about '10.3 Disposals' - emily


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
10 3 disposals l.jpg

10.3 Disposals

Property, Plant, and Equipment


3 methods of ppe disposal l.jpg
3 Methods of PPE Disposal

  • Retirement

    • Equipment is scrapped or discarded

  • Sale

    • Equipment is sold to another party

  • Exchange

    • Existing equipment is traded for new equipment


Net book value nbv l.jpg
Net Book Value (NBV)

  • Recall:

    NBV = Asset Cost – Accumulated Amortization

  • Must calculate amortization for partial year to date

    • Eg. Disposed of equipment on April 1st (must calculate 3 months of amortization (3/12) for January to March)


Retirement l.jpg
Retirement

  • Eg. Celino Inc. retires its computer printers, which cost $32,000 on Aug. 8. The accumulated amortization of the printers is $32,000.

    Aug 8 Accum. Amort – Print. Equip. 32,000

    Printing Equip. 32,000

  • Accumulated Amortization is always less than or equal to total cost


Loss on disposal l.jpg
Loss on Disposal

Gain

(Loss)

  • Retirement prior to full amortization (loss is expense)

    Aug 8 Accum. Amort – Deliv. Equip. 24,000

    Loss on Disposal 4,000

    Delivery Equip. 28,000

Net Book Value

Net Book Value

Proceeds

Proceeds

Proceeds

=

-

-

-

$ 0 - $4,000 = ($4,000)

($28,000 - $24,000)


Slide6 l.jpg
Sale

Gain

(Loss)

Proceeds > NBV ** Gain on Disposal CR

Proceeds < NBV ** Loss on Disposal DR

Net Book Value

Net Book Value

Proceeds

Proceeds

Proceeds

=

-

-

-


Gain on disposal example l.jpg
Gain on Disposal Example

  • On July 1st 2008 Celino Inc sells office furniture for $16,000 cash. The furniture originally cost $60,000. As at January 1st 2008 it had accumulated amortization of $41,000. Amortization for the first six months of 2008 is $8000. Record the necessary journal entries(s).


Gain on disposal l.jpg
Gain on Disposal

Jul 1 Amortization Expense 8,000

Accumulated Amortization 8,000

to record amortization expense for 2008

* updated Accum. Amort. Bal = $49,000 (Cal: 41 + 8)

Jul 1 Cash 16,000

Accumulated Amortization 49,000

Office Furniture 60,000

Gain on Disposal 5,000

to record sale of office furniture at a gain


Exchange l.jpg
Exchange

  • A new asset is typically purchased by trading in an old asset, on which a trade-in allowance is given towards the purchase of the new asset