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ACG 2021 PowerPoint Presentation

ACG 2021

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ACG 2021

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Presentation Transcript

  1. ACG 2021 Chapter 7 Summary

  2. Long-Term Assets (PP&E)

  3. Allocating Costs • All Costs Associated with Purchase of Asset • Costs needed to use Asset for Intended Purpose

  4. What if you buy Multiple Assets Together?

  5. What happens when you use up an Asset? • Assets: • Economic Resources that provide a future Benefit • Benefit provided by Long-Term Assets • Revenue • Matching Principle • Record any costs associated with Revenue Earned in the Period • Consumption of Assets are a Cost, so we must Expense

  6. Expense is Called

  7. Depreciation Methods

  8. Accounting Transaction • Deprecation Expense xxxx • Accumulated Depreciation xxxxxx • Accumulated Depreciation is a • Contra Asset • Asset – Accumulated Depreciation = • Book Value of the Asset

  9. Capital Expenditure vs. Immediate Expense • Capital Expenditure • Add Cost to existing Asset and depreciate • Rules: • Capital Expenditures • Increase the capacity of the asset • It can do more • Drive more, make more copies, produce more widgets • Increase the useful life of the asset • It will last longer • Immediate Expense • Maintenance costs or Restoration costs