Depreciation Accounting 1 Types of Long-Lived Assets y Tangible asset y Asset with physical substance y Property‚ plant‚ and equipment = fixed asset. y Intangible asset y Intellectual property. y No physical substance y Examples are patent rights‚ copyrights 2 Amortization y y View capital asset as bundle of services Similar to prepaid expenses‚ cost is expensed as company benefits from the services y y y y Land - no depreciation Plant and equipment - depreciation Natural
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Learning Task Number Four The Henry Furniture Co. is a new company and has numerous fixed assets that need to be depreciated. You can help Henry by determining the depreciation rates for the assets and the amount of depreciation for year one. The assets were purchased at various times during the year (hint: watch out for the dates). The following assets will be held by the company for at least the next two years (In other words‚ year two will be a full year for all of the assets). Please fill
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Purchase Invoice * Bills for purchased goods and services may not arrive in the correct fiscal period * However‚ it must follow the Matching Principle * To follow GAAP‚ accounts payable is used to cover for expenses * Adjusting for Depreciation: * Learned later on Journalizing * Beware of
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Week Three Exercises Fatma Miljkovic ACC/290 March 25‚ 2013 Professor: Tim Callaghan | BE4-1 | Transactions that affect earnings do not necessarily affect cash. | Hint: Identify impact of transactions on cash and net income.(SO 2‚ 9) | | | InstructionsIdentify the effect‚ if any‚ that each of the following transactions would have upon cash and net income. The first transaction has been completed as an example. | | | | | Cash | Net Income | (a) | Purchased $100
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Recognizing Differences Rita Godwin August 22nd‚ 2014 X/ACC 291 Shontell Chrisman What are the differences between valuation‚ depreciation‚ amortization‚ and depletion? Valuation‚ depreciation‚ amortization and depletion all have differences among them. Depreciation is the process of allocation to expense the cost of plant assets over the span of life when it is useful in a rational and systematic way. It is used on tangible assets such as equipment‚ land and
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Accounting Standards 6 and 10 on ‘Depreciation Accounting’ and ‘Accounting for Fixed Assets’ Accounting Assets Financial Audit Autonomous Bodies‚ AS 6 and AS Session 1.5 9 1 Session Coverage • AS-6 ‘Depreciation Accounting’; A i ’ • and d • AS 10 ‘Accounting for Fixed AS-10 Accounting Assets’ Financial Audit Autonomous Bodies‚ AS 6 and AS Session 1.5 9 2 Learning Objective • At the end of this session‚ the learner will be able to apply the concepts contained
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labeled “Depreciation related to capitalized interest” relates to the depreciation of the interest that was capitalized as part of the cost of the asset. b. The first adjustment increases income because interest is not being expensed immediately but instead is capitalized as part of the cost of the asset to which it relates. The second adjustment decreases income because under Country A GAAP‚ the asset to which interest is capitalized has a larger cost and therefore a larger depreciation expense
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Task 1 1. A roll forward is an important test in relation to year-end balance of gross PPE. It is necessary for the auditor to have assurance about the amount on the year-end 2011 balance sheet. However‚ a majority of the dollar amounts on the balance sheet should have been tested in the previous year. Roll forward allows the auditor to asses any activity since the last recording on the balance sheet. The mathematical accuracy is crucial because if the numbers are off‚ the auditor could be tested
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vendor. Cash flow reflects the cash that actually went out the door during a period. - Capital expenditures do not count against profit directly. A capital expenditure does not appear on the income statement when it occurs. It is only the depreciation that is charged against revenue over time which is based on the useful life of the item that was purchased. The cash flow reflects a different story as most items are paid for long before they may be fully depreciated on the profit and loss statement
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Profit Determination Prepared by John Hoggett and Clare Innes Measurement of Profit • Cash basis • Cash income received - Cash expenses paid – Revenues recorded when received – Expenses recorded when paid • Accrual basis • Profit = Income (incl. Revenues) - Expenses – Revenue is recognised when the anticipated inflow of economic benefit can be reliably measured – Expenses when the consumption of benefits can be reliably measured 2 Adjusting Entries • The need for adjusting entries-
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