Scribd Logo
Upload

Welcome to Scribd!

  • 25 views

    Chapter 9 Long-Term Assets Chapter 9 Long-Term Assets: Cost Determination

    Uploaded by

    Sunny Patel
    This document summarizes key aspects of accounting for long-term assets, bonds payable, and the statement of cash flows. It discusses the cost and treatment of expenditures for long-term assets, different depreciation methods, and accounting for asset disposals. It also covers how to interpret bond certificates, calculate interest payments, and account for bond issuances at face value, a discount, or premium. Finally, it provides guidance on classifying transactions into the three sections of the statement of cash flows for operating, investing, and financing activities.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd

    Chapter 9 Long-Term Assets Chapter 9 Long-Term Assets: Cost Determination

    Uploaded by

    Sunny Patel
    25 views2 pages
    This document summarizes key aspects of accounting for long-term assets, bonds payable, and the statement of cash flows. It discusses the cost and treatment of expenditures for long-term assets, different depreciation methods, and accounting for asset disposals. It also covers how to interpret bond certificates, calculate interest payments, and account for bond issuances at face value, a discount, or premium. Finally, it provides guidance on classifying transactions into the three sections of the statement of cash flows for operating, investing, and financing activities.

    Original Description:

    Accounting CHapter Review UIC

    Original Title

    Review Chap9, 10&12- May 3

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document summarizes key aspects of accounting for long-term assets, bonds payable, and the statement of cash flows. It discusses the cost and treatment of expenditures for long-term assets, different depreciation methods, and accounting for asset disposals. It also covers how to interpret bond certificates, calculate interest payments, and account for bond issuances at face value, a discount, or premium. Finally, it provides guidance on classifying transactions into the three sections of the statement of cash flows for operating, investing, and financing activities.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    25 views2 pages

    Chapter 9 Long-Term Assets Chapter 9 Long-Term Assets: Cost Determination

    Uploaded by

    Sunny Patel
    This document summarizes key aspects of accounting for long-term assets, bonds payable, and the statement of cash flows. It discusses the cost and treatment of expenditures for long-term assets, different depreciation methods, and accounting for asset disposals. It also covers how to interpret bond certificates, calculate interest payments, and account for bond issuances at face value, a discount, or premium. Finally, it provides guidance on classifying transactions into the three sections of the statement of cash flows for operating, investing, and financing activities.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Chapter 9 Long-Term Assets

    Chapter 9 Long-Term Assets


    Cost

    determination:

    the

    purchase price and all necessary expenditures needed to prepare the asset for its intended use Land, Building, Machinery Basket asset purchase: the total cost is separated on the basis of their relative market value
    Additional
    Ordinary

    expenditure
    repairs and maintenance

    Expense

    Acquisition 1. Compute cost.

    Use 2. Allocate cost to periods benefited. 3. Account for subsequent expenditures.

    them: lower income, lower balance of assets, expense is recognized currently.

    Disposal 4. Record disposal.

    Extraordinary
    Capitalize

    repairs and major additions

    them: higher income, higher balance of assets, deferred expense Change in depreciation over the rest of assets life.

    Chapter 9 Long-Term Assets

    Chapter 9 Long-Term Assets


    Intangible
    Cost:

    Depreciation: Cost allocation concept


    assets:

    Straight-line method Units of production Accelerated method: double declining method Total depreciation expense over the entire life of the asset is the same using any method, but the depreciation expense of each single year may be different. Recognize any unrecorded depreciation expense

    purchase price, legal fees, and filing fees. Amortization Indefinite life: no amortization Limited life: straight-line amortization Amortization period is the useful life of the asset, which is the period that the asset benefits the firm.
    Fixed

    Asset disposal

    asset turnover=

    Net Sales Average Net Fixed Assets

    Depreciation Journal Entry must be included

    Remove the asset and the accumulated depreciation associated with the asset from books Record the cash receipts (or payment) Recognize any gain or loss

    Current

    liabilities (Chap 10)


    payable, accrued liabilities, unearned revenue notes payable

    Accounts

    Short-term

    Appendix C: Time value of money


    Value and Present Value of a single amount (Table C.1 and C.2) Future Value and Present Value of an annuity (Table C.3 and C.4) Compounding interest
    Interest Compounding Period Total

    Chapter 10 Bonds Payable


    Bonds: How
    Face

    Future

    publicly traded debts to interpret the face of bond certificate

    value = principle paid at maturity date, maturity date Stated rate:


    Issue
    interest

    rate is always express on annual basis. period

    payment=face value * stated rate * time

    Bond

    issuance
    the bond issue price
    price=PV of principle + PV of interest payments

    rate =

    Annual interest rate Number of periods per year

    Computing
    Issue

    Record
    State State

    the bond issuance:

    number of periods= total number of years * number of periods per year

    rate = market rate, at face value, rate < market rate, at a discount, State rate > market rate, at a premium

    Chapter 12 Statement of Cash Flows

    Chapter 12 Statement of Cash Flows

    Classifying Cash Flows


    Cash flow from operating activities.

    Indirect method to prepare the section of cash flow from operating activities

    Cash flows that directly relate to Revenues or Expenses Purchase/sale of long-lived assets Purchase/sale of investment securities Lend cash or Receive principle repayment on maturity Issuing stock Pay dividends Borrowing cash / repay the principle

    Cash flow from investing activities


    Usually CA and CL are affected by operating activities (short-term investment excluded) Usually, LT assets are affected by investing activities Usually, LT liabilities and contributed capital are affected by financing activities RE=Net income (operating) dividends (financing)

    Cash flow from financing activities


    Cash Flow from Operating Activities Net Income noncash expenses Increase / Decrease in CA Increase / Decrease in CL Net CF from Operating Activities

    + -/+ +/-

    You might also like