BankChapter 13 - Property‚ Plant‚ and Equipment: Depreciation and Depletion Chapter 13 Property‚ Plant‚ and Equipment: Depreciation and Depletion True / False Questions 1. The auditors’ approach to the audit of property‚ plant‚ and equipment largely results from the fact that relatively few transactions occur. True False 2. A major control procedure related to plant and equipment is a budget for depreciation. True False 3. Evidence of continued ownership of property is obtained by vouching
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Annual Report 2011‚ pp.2) Question 3: Depreciation method applied The number of note deals with Statement of Significant Accounting Policies is Note 1. The specific depreciation method applied is Straight-line Method. Leasehold improvements are calculated at the shorter of the depreciation period or the term of the lease. (Nick Scali Limited‚ Annual Report 2011‚ pp.22) Question 4: Depreciation expense and accumulated depreciation Total depreciation expense for the year ending 30 June 2011
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Useful life = ($35‚000‚000 ̶ $5‚000‚000) / 5 years = $6‚000‚000 per year b. Depreciation per unit = (Cost – Residual value) / Useful life in units = ($35‚000‚000 ̶ $5‚000‚000) / 6‚000‚000 miles = $5 per mile Units-of-production = Depreciation per unit × Current year usage = $5 per mile × 1‚000‚000 miles = $5‚000‚000 for year 1 c. Double-declining-balance = (Cost – Accumulated depreciation) × 2 × (1 / Useful life) = ($35‚000‚000 ̶ $0) × 2 × (1/ 5 years) = $14‚000‚000
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full year ’s depreciation expense is to be recorded in 2013. The equipment was used 20 000 hours during 2013 and 24 000 hours during 2014. The number of expected hours over five years is 100 000. Clear Window is comparing the straight-line and reducing-balance depreciation methods. Of these two methods‚ which method creates the larger expense and larger tax savings in 2013? a. Straight-line depreciation creates the larger expense‚ while reducing-balance depreciation creates the
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land‚ plant and equipment and natural resources. An intangible asset has no physical substance. These will include good will‚ patent rights and copyrights. Land is not normally amortized because its useful life is assumed to be indefinitely long. Depreciation is process of converting the original cost of plant and equipment assets to expense. Depletion on the other hand is the process of converting the cost of the natural resource assets to expense. If the intangible assets are converted to expense
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Inventory valuation methods: 5. Depreciation methods: 6. Depreciation computations: 7. Depreciation computations: ACC205_Week_Three_Exercise_Assignment: Inventory 1. Specific identification method. 2. Inventory valuation methods: basic computations. 3. 3. 3. Perpetual inventory system: journal entries 4. 4. 4. Inventory valuation methods: computations and concepts 5. 5. 5. Depreciation methods. 6. 6. 6. Depreciation computations. 7. 7. 7. Depreciation computations: change in estimate.
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following paragraphs: 1. The land at the old site‚ together with the building thereon‚ was sold for $149‚860 cash. 2. Certain equipment was sold for $35‚200 cash. This equipment appeared on the books at a cost of $73‚645 less accumulated depreciation of $40‚890 for a net book value of $32‚755. 3. A new printing press was purchased. The invoice cost of this equipment was $112‚110. A 2 percent cash discount was taken by Stafford Press so that only $109‚868 was actually paid to the seller.
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(Rs in Crores) PARTICULARS F.Y(2012-13) CY(2011-12) Revenue from operations 2959.03 2554.44 Profit before finance cost depreciation & taxation 238.26 196.74 Finance cost 109.67 93.82 Depreciation & amortization expenses 56.51 47.31 Profit before tax(PBT) 72.08 55.61 Tax expense 2.83 3.63 Profit after taxation(PAT) 69.25 51.98 Interim equity dividend paid including tax 15.28 Nil Proposed dividend 5.13
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Harnischfeger altered their depreciation from a direct method to the straight-line method for financial reporting purposes. They also included the products purchased from Kobe Steel‚ LTD and sold by them in their net sales instead of stating only the gross margin per unit. An adjustment of the residual values on certain machinery and equipment was made and they also included the financial statements of some foreign subsidiaries. 2. What is the effect of the depreciation accounting method change on
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simply a substitution from the historical cost method. Component depreciation is a particular area of a depreciable asset which may have a different estimated useful life. Component depreciation is general considered as a separate depreciated value‚ and is normally used by only the IFRS‚ however the GAAP does sometimes use this type of component depreciation. This type of depreciation would normally be used to view the depreciation as an authorization or allocation of cost over useful life of the
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