《AccountingBasics英语会计基础教学课件7.pptx

Chapter 10Property, plant and equipment; intangible assets and goodwill; mineral resources and biological assetsWEEK 7Autumn 2012ACCY901Learning ObjectivesDescribe how the cost principle applies to property, plant and equipment (PPE)Explain the concept of depreciation and calculate periodic depreciation using different methodsIdentify the capital expenditure, and explain the entries for these expendituresDescribe the measurement of PPE subsequent to acquisition and how to account for the disposal of PPEExplain the basic issues related to account for intangible assets and goodwillExplain how PPE, intangible assets and goodwill are reportedPROPERTY, PLANT AND EQUIPMENTProperty, plant and equipment (PPE) are resources that …Have a physical substanceAre used in the operation of a businessAre not intended for sale to customersThey are also called fixed assetsThey are expected to provide services for a number of years but decline in service potential over their useful livesDetermining the cost of PPELO1Cost principle requires PPE initially be recorded at costCost consists of all expenditures necessary to acquire the asset and make it ready for its intended useIt includes purchase price, freight costs and installation costsDetermining the cost of PPE continued1. LandThe cost of land includes:Cash purchase price plus stamp dutySettlement costs such as title and lawyer’s feesReal estate agents’ commissionsAccrued property taxes and other liens on the land assumed by the purchaserLand Cash price of property $100 000Net removal cost of warehouse 6 000Lawyer’s fee 1 000Real estate agent’s commission 8 000 Cost of land Determining the cost of PPE continuedAll necessary costs incurred to make land ready for its intended use are debited to the Land accountExampleDetermining the cost of PPE continued2. Land improvementsThe cost of land improvements includes all expenditures needed to make the improvements ready for their intended useCosts of land improve