TAILIEUCHUNG - Lecture Financial Accounting (15e): Chapter 9
After completing this chapter you should be able to: Explain the cost principle for computing the cost of property, plant and equipment; explain depreciation for partial years and changes in estimates; distinguish between revenue and capital expenditures, and account for them. | Plant and Intangible Assets Chapter 9 Chapter 9: Plant and Intangible Assets Plant assets represent a bundle of future services, and can be thought of as long-term prepaid expenses. The cost of plant assets is the advance purchase of services. As years pass, and the services are used, the cost is transferred to depreciation expense. Plant Assets as a “Stream of Future Services” Plant assets represent a bundle of future services, and can be thought of as long-term prepaid expenses. They are tangible assets that are used actively in the operations of an entity. It’s fully expected that these assets, sometimes referred to as property, plant, and equipment, will benefit future periods. When a plant asset is acquired, it is recorded at its historical cost. Once the asset is placed in service, a portion of the asset’s cost is allocated to depreciation expense as the asset becomes older. Major Categories of Plant Assets There are three major categories of plant assets: Tangible plant assets are long-term assets that have physical substance. Examples include land, buildings, equipment, furniture, and fixtures. Intangible assets are noncurrent assets with no physical substance. Examples include patents, copyrights, trademarks, franchises, and goodwill. Natural resources are acquired for extracting valuable resources to be used in the business. Examples include oil reserves, timber, and other minerals. This chapter will review the accounting issues related to these three categories. Accountable Events in the Lives of Plant Assets Acquisition. Allocation of the acquisition cost to expense over the asset’s useful life (depreciation). Sale or disposal. There are three accountable events to discuss. When a plant asset is acquired, it is recorded at its historical cost. The next slide will show how this cost is determined. Once the asset is placed in service, a portion of the asset’s cost is allocated to depreciation expense as the asset becomes older. Finally, at the end of an .
đang nạp các trang xem trước