accelerated method加速折旧.ppt

Chapter 6 Property, Plant, and Equipmentand Intangible Assets: Utilizationand Impairment Goodwill and trademarks have indefinite useful lives and are not amortized into the results of operations, but instead are reviewed for impairment annually, or more often if impairment indicators arise. If an impairment is determined to exist, we will reduce the asset account and recognize the loss in value. Change in Depreciation Method December 31, 2011: Depreciation expense ................................... 34,667 Accumulated depreciation................ 34,667 To record depreciation expense. Error Correction Errors found in a subsequent accounting period are corrected by . . . ? Entries that restate the incorrect account balances to the correct amount. ? Restating the prior period’s financial statements. ? Reporting the correction as a prior period adjustment to Beginning R/E. In addition, a disclosure note is needed to describe the nature of the error and the impact of its correction on net income, income before extraordinary items, and earnings per share. Impairment of Value Accounting treatment differs. Long-term assetsto be held and used Long-term assetsheld for sale Tangible andintangible  with finiteuseful lives Intangiblewithindefiniteuseful lives Goodwill Test for impairmentof value when consideredfor sale. Test for impairment of value at least annually. Test for impairment of value when it is suspected that book value may not be recoverable Finite-life Assets to be Held and Used An asset is impaired when . . . The undiscounted sum of its estimated future cash flows Measurement – Step 1 Itsbookvalue Impairmentloss = Bookvalue Fairvalue – Measurement – Step 2 $0 $250 $125 Case 1: $50 book value. No loss recognized Case 2: $150 book value. No loss recognized Case 3: $275 book value. Loss = $275 - $125 Fair Value Undiscounted futurecash flows Market value, price of similar assets,or PV of future net cash inflows.