財務會計概念與應用英文版Lecture9

1、copyright 2008 thomson south-western, a part of the thomson corporation. thomson, the star logo, and south-western are trademarks used herein under license.1chapter 9investments in property, plant, and equipment and in intangible assetsalbrecht, stice, stice, swain2long-term assets property, plant,

2、and equipment tangible assets acquired for the use in business operations. land, buildings, and equipment. intangible assets assets without physical substance that are used in business. licenses, patents, franchises, and goodwill.3capital budgeting capital budgeting planning for investment in long-t

3、erm assets. long-term assets have value because they help companies generate future cash flows. involves comparing the cost of the asset to the value of the expected cash flows, after adjusting for the time value of money. time value of money the concept that a dollar today is worth more than a doll

4、ar received in the future.4asset acquisition include purchase price. include costs incurred to acquire the asset and getting it ready for its intended use. sales tax, shipping, installation, and other costs.fork lift. . . . . . . . . . . . . . . . . . . . . . . .12,500cash. . . . . . . . . . . . . .

5、 . . . . . . . . . .3,500notes payable. . . . . . . . . . . . . . . .9,000purchased a fork lift for $12,000 and paid $500 for shipping; paid $3,500 cash and issued a note for $9,000 to the bank.5leases lease a contract that specifies the terms under which the owner of an asset (the lessor) agrees to

6、 transfer the right to use the asset to another party (the lessee). what terms should be included in a lease? term payment amount due dates6match lease termsthe party that is granted the right to use the property under the terms of a lease.lesseelessoroperating leasecapital leasethe owner of propert

7、y that is leased (rented) to another party.a simple rental agreement.a leasing transaction that is recorded as a purchase by the lessee.7classifying leasesa lease is classified as a capital lease if it is non-cancelable and meets one of the following criteria:1. lease transfers ownership of the asse

8、t.2. lease contains a bargain purchase option.3. lease term is equal to 75% or more of the estimated life of the asset.4. present value of the lease payments is equal to 90% or more of the fair market value of the asset.8operating leasedahl & sons, attorneys at law, leases a building with monthl

9、y rental payments of $1,000. make the appropriate entry if rent is paid in cash the first month.rent (or lease) expense . . . . . . . . . .1,000 cash. . . . . . . . . . . . . . . . . . . . . . . .1,000to record monthly rent of storage building.9capital leasedahl & sons enters into a non-cancelab

10、le lease agreement that requires lease payments of $100,000 a year for 20 years. at the end of 20 years, dahl & sons will own the property. the present value of the lease payments at a 10% discount rate is $851,360. make the appropriate entries.leased property. . . . . . . . . . . . . . . . 851,

11、360lease liability. . . . . . . . . . . . . . . . 851,360to record commercial building acquired under a 20-year non-cancelable lease.lease liability. . . . . . . . . . . . . . . . . . 14,864 interest expense. . . . . . . . . . . . . . . . 85,136 cash. . . . . . . . . . . . . . . . . . . . . . . . 10

12、0,000to record annual payment under capital lease.10assets acquired byself construction self-constructed assets recorded at cost. include all expenditures incurred to build the asset and make it ready for its intended use. costs include: materials used to build the asset. the construction labor. cap

13、italized interest. some reasonable share of the general company overhead.11basket purchases %when two or more assets are acquired at a single price, the prices are allocated on the “relative fair market value” method. in this example, dahl and sons purchased land and a building at a total cost of $3

14、,600,000. prepare the entry to record the purchase.land. . . . . . . . . . . . . . . . . . . . . . . . . . .900,000 building. . . . . . . . . . . . . . . . . . . . . . . . 2,700,000cash. . . . . . . . . . . . . . . . . . . . . . . .3,600,000to record building and land acquired for $3,600,000. 3,000,

15、000100$3,600,000assetfmv% of totalvaluecostland$1,000,000 25%0.25 x $3,600,000 = $ 900,000building 750.75 x $3,600,000 = 2,700,000total$4,000,00012depreciation depreciation the process of cost allocation that assigns the original cost of plant and equipment to the periods benefited. book value the a

16、ssets original cost less any accumulated depreciation. salvage value the amount expected to be received when the asset is sold at the end of its useful life.13straight-line depreciation costs assigned equally to all periods benefited.annual depreciationexpense=cost - salvage valueestimated usefullif

17、e (years)=$24,000 - $2,0004 years$5,500depreciation expense. . . . . . . . . . . . . . . . . 5,500accumulated depreciation. . . . . . . . . . . 5,500to record annual depreciation for truck.14units-of-production depreciation assigning depreciation according to what has been used during the year.per u

18、nitdepreciation=cost - salvage valueestimated life in unitsdepreciationexpense=per unitdepreciationxunitsproduceddepreciation expense. . . . . . . . . . . . . . . . . 4,400accumulated depreciation. . . . . . . . . . . 4,400to record annual depreciation for truck.($24,000 - $2,000)60,000 milesx12,000

19、miles=$4,40015partial-year depreciation straight-line method calculate depreciation expense for the year. distribute it evenly over the number of months the asset is held during the year. units-of-production method the same as normal because it is based off of the actual usage.16repairing and improv

20、ing assets ordinary expenditures typically benefit only the period in which they are made. (i.e. repairs, maintenance, and minor improvements.) expense when incurred. capital expenditures significant in amount and benefit more than the current period. increase the productive life or capacity of the

21、asset. (i.e. engine overhaul, components added.) capitalize and add to asset value. depreciated over the remaining life of the asset.17impairments impairment a decline in the value of a long-term operating asset.sum of future cash flows from assetbook value of assetis sum of future cash flows less t

22、han the book value?impairmentrecognize loss and record asset at fair value.no impairmentcontinue to recognize asset at book value.yesno18impairments journal entry reduces property value as listed on balance sheet and clears out the accumulated depreciation. increases in asset values can never be rec

23、ognized according to gaap.accumulated depreciation. . . . . . . . . . . . . 4,000loss on impairment of equipment . . . . . . 1,000building . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000to record impairment of building.19discarding and selling long-term assets an assets cost and accumulate

24、d depreciation must be removed from the accounting records. assets can be: discarded (scrapped) sold exchanged20discarding property, plant, and equipmentaccumulated depreciation, conveyor . . . 15,000loss on disposal of conveyor . . . . . . . . . 300 conveyor. . . . . . . . . . . . . . . . . . . . .

25、 . . . 15,000 cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . 300 scrapped $15,000 copier and paid $300 disposal costs.dahl & sons purchased an advance copier system for $15,000. it has a 5-year life, no salvage value, and is depreciated on a straight-line basis. if frank pays $300 t

26、o have the copier removed, what is the appropriate entry?21selling property, plant, and equipmentcash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600accumulated depreciation, conveyor . . . 12,000loss on sale of conveyor. . . . . . . . . . . . . 2,400conveyor. . . . . . . . . . . .

27、. . . . . . . . . . . . . 15,000sold $15,000 copier at a loss of $2,400.dahl & sons purchased an advanced copier system for $15,000. it has a 5-year life, no salvage value, and is depreciated on a straight-line basis. if the copier is sold for $600 after only four years of service, dahl & so

28、ns will experience a loss of $2,400. make the appropriate entry.losses are incurred when the asset is sold for less than the book value and gains are recorded when the asset is sold for more than the book value.22accounting for intangibles intangibles rights and privileges that are:long-lived.not he

29、ld for resale.have no physical substance.providing owner with competitive advantage over other firms. amortization periodic allocation to expense of an intangible assets cost. conceptually, the same as depreciation. intangible assets generally use straight-line amortization.23types of intangibles pa

30、tent an exclusive right granted for 17 years by the u.s. federal government to manufacture and sell an invention. franchise an entity that has been licensed to sell the product of a manufacturer or to offer a particular service in a given area. license the right to perform certain activities, genera

31、lly granted by a government agency.24recognizing intangible assets intangible assets are only recognized in the financial statements if they have been purchased. amortize over the economic life of the intangible asset. intangible assets with indefinite lives are not amortized. intangible assets must

32、 be analyzed to determine if impairment has occurred.25goodwill goodwill an intangible asset that exists when a business is valued at more than the fair market value of its net assets, usually due to: strategic location reputation good customer relations equal to the excess of the purchase price ove

33、r the fair market value of the net assets purchased.26accounting for goodwilldahl & sons purchased clark & associates for $1,200,000. at the time, the following market values existed for clarks assets and liabilities:inventory$750,000 long-term operating assets220,000 other assets25,000 liab

34、ilities (18,000)total net assets$977,000 inventory. . . . . . . . . . . . . . . . . . . . . . 750,000long-term operating assets . . . . 220,000other assets. . . . . . . . . . . . . . . . . . 25,000goodwill . . . . . . . . . . . . . . . . . . . . . 223,000liabilities. . . . . . . . . . . . . . . . .

35、. 18,000cash . . . . . . . . . . . . . . . . . . . . . .1,200,000purchased clark & associates for $1,200,000.27measuring the management of long-term assets fixed asset turnover the amount of dollars in sales generated by each dollar of fixed assets. standard values for this ratio differ from ind

36、ustry to industry.salesaverage pp&e28accelerated depreciation methods declining-balance method an assets book value is multiplied by a constant depreciation rate. this is double the straight-line percentage in the case of double-declining balance (ddb). sum-of-the-years-digits method a constant balance (cost minus salvage value) is multiplied by a declining depreciation rate calculated based off of the sum of the years.29double-declining-balancex 2 =double-declining balancedepreciation expensebook valueassets life in yearsbook value = cost accumulated d