ACTG 211 Lecture Notes - Lecture 7: Intangible Asset, Macrs

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30 May 2018

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Accounting 211 – Lecture 7 – Reporting and Analyzing

Long-Term Assets

Plant Assets

• Tangible in nature

• Actively used in operations

• Expected to benefit future periods

• Called property, plant and equipment

Land, Land Improvements, and Buildings

• Land is not a depreciable asset

• Land improvements are

o Parking lots, lighting, parking meters, etc.

• The cost of buildings may include:

o Cost of purchase or construction

o Brokerage fees

o Taxes

o Title fees

o Attorney fees

Machinery and Equipment

• Purchase price

• Taxes

• Transportation charges

• Insurance while in transit

• Installing, assembling, and testing

Lump-Sum Asset Purchase

• The total cost of a combined purchase of land and building is separated on the basis of

their relative market values

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Document Summary

Accounting 211 lecture 7 reporting and analyzing. Plant assets: tangible in nature, actively used in operations, expected to benefit future periods, called property, plant and equipment. Land, land improvements, and buildings: land is not a depreciable asset, land improvements are, parking lots, lighting, parking meters, etc, the cost of buildings may include, cost of purchase or construction, brokerage fees, taxes, title fees, attorney fees. Machinery and equipment: purchase price, taxes, transportation charges. Lump-sum asset purchase: the total cost of a combined purchase of land and building is separated on the basis of their relative market values. On january 1, matrix inc. purchased land and a building for ,000 cash. The appraised values of each were: building = ,500, land = ,500. Depreciation: depreciation is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use, acquisition cost cost allocation expense.

Related Questions

At December 31, 2015, Cord Company's plant asset and accumulateddepreciation and amortization accounts had balances as follows:

Category	Plant Asset		Accumulated Depreciation and Amortization
Land	$	178,000	$	â
Buildings		1,650,000		331,900
Machinery andequipment		1,275,000		320,500
Automobiles andtrucks		175,000		103,325
Leaseholdimprovements		222,000		111,000
Landimprovements		â		â

Depreciation methods and usefullives:

Buildingsâ150% decliningbalance; 25 years.

Machinery and equipmentâStraightline; 10 years.

Automobiles and trucksâ150%declining balance; 5 years, all acquired after 2012.

Leasehold improvementsâStraightline.

Land improvementsâStraightline.

Depreciation is computed to thenearest month and residual values are immaterial. Transactionsduring 2016 and other information:

a.	On January 6, 2016, a plant facility consisting of land andbuilding was acquired from King Corp. in exchange for 28,000 sharesof Cord's common stock. On this date, Cord's stock had a fair valueof $50 a share. Current assessed values of land and building forproperty tax purposes are $195,000 and $585,000, respectively.
b.	On March 25, 2016, new parking lots, streets, and sidewalks atthe acquired plant facility were completed at a total cost of$210,000. These expenditures had an estimated useful life of 12years.
c.	The leasehold improvements were completed on December 31, 2012,and had an estimated useful life of eight years. The related lease,which would terminate on December 31, 2018, was renewable for anadditional four-year term. On April 29, 2016, Cord exercised therenewal option.
d.	On July 1, 2016, machinery and equipment were purchased at atotal invoice cost of $328,000. Additional costs of $10,000 fordelivery and $53,000 for installation were incurred.
e.	On August 30, 2016,Cord purchased a new automobile for $12,800.
f.	On September 30, 2016, a truck with a cost of $24,300 and a bookvalue of $9,600 on date of sale was sold for $11,800. Depreciationfor the nine months ended September 30, 2016, was $2,160.
g.	On December 20, 2016, a machine with a cost of $18,500 and abook value of $3,050 at date of disposition was scrapped withoutcash recovery.

Required:

Prepare a schedule analyzing the changes in each of the plantasset accounts during 2016. Do not analyze changes in accumulateddepreciation and amortization.

CORD COMPANY
Analysis of Changes in Plant Assets
For the Year Ending December 31, 2016
	Balance			Balance
	12/31/15	Increase	Decrease	12/31/16
Land	$178,000
Landimprovements	--
Buildings	1,650,000
Machinery and equipment	1,275,000
Automobiles and trucks	175,000
Leasehold improvements	222,000
	3,500,000

2.	For each asset category, prepare a schedule showing depreciationor amortization expense for the year ended December 31,2013. (Do not round intermediatecalculations.)

CORD COMPANY
Depreciation and Amortization Expense
For the Year Ending December 31, 2016
LandImprovements
Buildings
Machinery and equipment
Automobiles and trucks
Leasehold improvements
Totaldepreciation and amortization expense for 2016

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ACTG 211 Lecture Notes - Lecture 7: Intangible Asset, Macrs

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