Home
Flashcards
Preview
Accounting Exam 5
Home
Get App
Take Quiz
Create
four main issues in accounting for plant assets:
(1) computing the costs of plant assets
(2) allocating the costs of most plant assets (less any salvage amounts) against revenues for the periods they benefit
(3) accounting for expenditures such as repairs and improvements to plant assets
(4) recording the disposal of plant assets
straight line depreciation:
(cost-salvage value) / useful life in periods
units of production method:
(cost-salvage)/ total units in production = depreciation per unit
depreciation per unit x units produced in period = depreciation expense
declining balance method:
100% / useful life = straight line rate
2 x straight line rate = double-declining-balance rate
DDBR x beginning period book value = depreciation expense
change in estimates for depreciation:
(book value – revised salvage value)/ revised remaining useful life
Total Asset Turnover:
net sales / average total assets
Times interest earned:
income before interest expense and income taxes/ interest expense
Plant assets are set apart from other tangible assets by two important features:
use in operations
useful lives longer than one period.
Revenue expenditures
Revenue expenditures expire in the current period and are debited to expense accounts and matched with current revenues.
Ordinary repairs are an example of revenue expenditures
Capital expenditures
Capital expenditures benefit future periods and are debited to asset accounts.
Examples of capital expenditures are extraordinary repairs and betterments.
Total asset turnover measures:
a company’s ability to use its assets to generate sales
Author
andreabyerly
ID
119603
Card Set
Accounting Exam 5
Description
Accounting Exam 5
Updated
2011-11-29T20:35:06Z
Show Answers
Home
Flashcards
Preview