Nguyên lý kế toán - Chapter 9: Reporting and interpreting long - Lived tangible and intangible assets

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinChapter 9Reporting and Interpreting Long-Lived Tangible and Intangible AssetsPowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Fred Phillips, Ph.D., CATangiblePhysicalSubstanceIntangibleNo PhysicalSubstanceWill not be used up within the next yearActively Used in Operations Definition and Classification Land Assets subject to depreciationBuildings and equipmentFurniture and fixtures Examples Value represented by rights that produce benefits. Intangibles with a limited life, such as patents and copyrights, are subject to amortization. Intangibles with an unlimited (or indefinite) life, such as goodwill and trademarks, are not amortized.9-3Acquisition of Tangible AssetsPurchase costLegal feesSurveying feesBroker’s commissionsLandPurchase/construction costLegal feesAppraisal feesArchitectural fees Buildings9-4Maintenance Costs Incurredduring Use9-5Depreciation is a cost allocation process that matches costs of operational assets with periods benefited by their use. Cost AllocatonBalance SheetIncome StatementExpenseAcquisitionCostDepreciation ExpenseDepreciationExpenseIncomeStatementDepreciation forthe current yearBalanceSheetAccumulatedDepreciationTotal of depreciationto date for an asset9-6Depreciation Expense2008 DepreciationIncludes $130 for 2008Book value 20089-7Summary of Depreciation Methods9-8 Update depreciation to date of disposal. Record the disposal. dr Cash (+A)dr Accumulated Depreciation (-xA) cr Equipment (-A) Book valueDisposal of Tangible Assets cr Gain on Disposal (+R, +SE)Gain if cash received is greater than asset’s book value9-9dr Cash (+A)dr Accumulated Depreciation (-xA) cr Equipment (-A) Book valueDisposal of Tangible Assets Update depreciation to date of disposal. Record the disposal. dr Loss on Disposal (+E, -SE)Loss if cash received is less than asset’s book value9-10Noncurrent assetswithout physicalsubstance.Useful life isoften difficultto determine.Usually acquired for operational use. Often provideexclusive rightsor privileges.Intangible AssetsIntangibleAssets9-11Intangible AssetsRecord at current cash equivalent cost, including purchase price, legal fees, and filing fees.Amortize intangibles with limited lives over the shorter of their economic lives or legal lives using the straight-line method.9-12Trademarks and Copyrights A trademark is a symbol, design,or logo associated with a business.Internally developedtrademarks have norecorded asset cost.Purchased trademarksare recorded at cost.Amortize costover the periodbenefited.Legal life islife of creatorplus 70 years.A copyright is an exclusive right granted by the federalgovernment to protect artistic or intellectual properties.9-13Cost is purchaseprice plus legalcost to defend.Amortize costover the shorter of useful life or 20 years.Patents and Licensing RightsA patent is an exclusive right granted by the federalgovernment to sell or manufacture an invention.You may be using computersoftware that is made available to you through acampus licensing agreement.Licensing rights grant limited permission to use a productor service according to specific terms and conditions. 9-14FranchisesA franchise provides legally protected rightsto sell products or provide services purchasedby a franchisee from the franchisor.9-15GoodwillOccurs when onecompany buysanother company.Purchase Price > Fair Market Value of Net Assets AcquiredOnly purchased goodwill is an intangible asset.Is not amortized.Is impairmenttested and may bewritten down.9-16Summary of Accounting Rulesfor Long-Lived Assets9-17Impact of Depreciation DifferencesAccelerated depreciation, in the early years of an asset’s useful life, results in higher depreciation expense, lower net income, and lower book value than would result using straight-line depreciation.Selling an asset with a low book value, resulting from accelerated depreciation, might result in a gain. Selling the same asset with a higher book value, resulting from straight-line depreciation, might result in a loss. 9-18TotaldepletioncostInventoryfor saleUnsoldInventoryCost ofgoods soldNatural ResourcesDepletion is the process of allocating a naturalresource’s cost over the period of its extraction.Depletion is similar in concept to depreciation.Depletion that is computed for a period is first added toinventory and then expensed when the inventory is sold.9-19So depreciationis an estimate.Predictedresidual valuePredicteduseful life Over the life of an asset, new information may come to light that indicates theoriginal estimates need to be revised.Changes in Depreciation Estimates9-20End of Chapter 9