alkadhim
المدير
عدد المساهمات: 34
تاريخ التسجيل: 30/12/2007
 |  موضوع: Chapter 10 Summary  الجمعة يناير 18, 2008 1:55 pm | |
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Chapter Summary (10)
Plant Assets. Natural Resources, And Intangible Assets
Plant Assets (property, plant and equipment or fixed assets) are tangible resources that used in the operation of business and are not intended for sale
Plant assets are recorded at cost which consist of all expenditure necessary to acquire the assets and make if ready for its intended use
Examples
Land cost include: cash purchase price, closing cost such as title and attorney’s fees, real estate brokers’ commission, and accrued property tax
Buildings cost include: cash purchase price, closing cost such as title and attorney’s fees, real estate brokers’ commission, and accrued property tax and remodeling or repairing
Equipment include: cash price, sales tax, fright charges, and insurance during transit period by the purchaser, expenditure to assemble, install and test the equipment.
Exercise:
Delivery truck is purchase for $15000 cash, plus sales tax of $900 and delivery costs to the dealer of $500. The buyer also pays $200 for painting, $600 for annual insurance, and $80 for a motor vehicle license.
What is the cost of the delivery truck?
a) $15900
b) $16400
c) $16600
d) $17280
DEPRECIATION
Allocation of the cost of a plant asset over its useful life in a rational and systematic manner.
Factors in computing depreciation
1. Cost
2. Useful life
3. Salvage value (residual value)
Depreciation methods
1. Straight-line
2. Units-of-activity
3. Declining-balance
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