1 / 15

PLANT ASSETS

PLANT ASSETS. Study Objective. Describe the practice of cost of account to plant assets. The explanation about the depreciation opinion. The computing the depreciation period with different methods. Describe the rule of changing depreciation period.

nehru-garza
Download Presentation

PLANT ASSETS

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. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. PLANT ASSETS Study Objective • Describe the practice of cost of account to plant assets. • The explanation about the depreciation opinion. • The computing the depreciation period with different methods. • Describe the rule of changing depreciation period. • The difference between income and expense and explain about the transaction for the expense. • How to compute for asset in stop using of selling. • Compute the deduction of period natural resource. • The contrast between the intangible assets and plant assets. • How are plant assets, natural resource and intangible assets reported and analyzed.

  2. Fixed Assets Fixed Assets are fixed resource that they are used to operate the business and are not sold to the customer. Fixed Assets are divided in to four kinds : - Land - Land improvement - Building - Equipment Fixed assets are important for the business because : - Store assets in the condition of a good operation. - Replace the assets that over the deadline. - Improve the productivity of resource that we need.

  3. Example of Fixed assets On January 1 , 2009 Panha Co., Ltd purchased equipment for $13,000 in cash. The equipment has an estimated residual value of $1000.

  4. I. Formula for straight-line: Straight-line depreciation is the method that allocates the cost of an asset in equal periodic amounts over its useful life. Cost - Salvage Value = Depreciation cost $13,00- $1,000 = $12,000 Depreciation cost Annual Depreciation Expense Useful life (in year)

  5. Straight line depreciation schedule:

  6. II. Units of Activity Formula for units of activity method: Units of activity depreciation is a method to allocated the cost of an asset over its useful life based on the relation of its periodic output its total estimated out put. Depreciation cost Depreciation cost per units Total units of activity Depreciation cost per units × Units of activity during the year = Annual depreciation expense

  7. Units of activity depreciation schedule:

  8. III. Declining balance depreciation Declining balance depreciation is the method that allocates the of an asset over its useful life based on a multiple of the straight line rate of the two times. Formula for declining balance method: Book Value at beginning of year ×Declining Balance rate = Annual depreciation Expense

  9. Declining balance depreciation schedule:

  10. IV- Comparing depreciation methods: 12,000 10,000 8,000 Annual straight-line depreciation 6,000 6,000 4,000 2,000 2,000 1 2 3 4 5 Life in year

  11. IV- Comparing depreciation methods: 35,000 30,000 25,000 Annual production depreciation 20,000 15,000 10,000 0 1 2 3 4 5 Life in year

  12. IV- Comparing depreciation methods: 14,000 12,000 10,000 8,000 Annual declining balance depreciation 6,000 4,000 2,000 1 2 3 4 5 Life in year

  13. V- Change in Estimates for Depreciation On January 1, 2009, equipment was purchased that cost $ 60,000 Has a useful life of 10 year and no salvage value. During 2012, the useful life was revised to 8 year total (5 year remaining). Asset Cost $60,000 Accumulated depreciation 12,31,2010 ($60,000 × 3 year) $18,000 Remaining book value $42,000 Divide by remain life 5 Revised annual depreciation 8,400 Dec 31 Depreciation expense $ 8,400 Accumulated depreciation equipment $8,400

  14. Natural Resources: Cost determination and Depletion: Total cost – Salvage Value = Depletion cost per unit Total estimated Units Depletion cost per unit × Number of Units Extracted and sold = Annual Depletion Expense

  15. Robert Co., Ltd acquired a tract of land containing ore deposits. Total costs of acquisition and development were $100,000 and Robert estimates the land contained 40,000 tons of ore. During the first year of operations Robert extract and sold 13,000 tons of ore. $1,000,000 – $0 = $125 per ton 40,000 tons Depletion Expense = $125 per ton × 13,000 = $325,000

More Related