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churchman acct 301 ch 10 & 11

Terms in this set (28)

when recording the cost of new P,P&E...
include all costs required to get it ready
weighted-average accumulated expenditures for interest capitalization
amount x capitalization period ( time left in the year)= weighted average accumulated expenditures
weighted-average interest rate for interest capitalization
% x principal = interest
Interest/total principal=weighted average interest rate
journal entry to record the acquisition of the land with stock
dr Land
Cr common stock
pic
journal entry to record the exchange of two assets
dr new asset
acc dep
loss
cr old asset
cash
gain
If its a loss...with commercial substance
recognize immediately
if its a loss... with out commercial substance
recognize immediately
if its a gain... with commercial substance
recognize immediately
if its a gain.. without commercial substance
- defer if no cash received
if cash received :
-recognize part if < 25%
-recognize all if >25%
Disposals of Plant Assets update depreciation
dep
acc dep
Disposals of plant assets
acc dep
cash
loss
cr equipment
gain
how to calculate a loss or gain
fair value - book value
Activity Depreciation
cost-salvage value/ units = price per hour
straight line depreciation
(cost - salvage value) / useful life
sum-of-the-years'-digits method
n(n+1)/2. dep base cost-salvage value. dep base x (number of years left/sum of digits)
double declining balance depreciation
rate x book value.
book value = cost-acc dep
rate = 2/useful life
impairment loss
if expected future cash flows < book value (cost-acc dep)
impairment is book value - Fair value
journal entry for impairment
dr loss on impairment
cr acc dep
lump sum purchase
buy an asset in lump sum. allocate the cost by using the relative fair values of the assets acquired.

appraised per item/total appraised value = %
% x lump sum=allocation price
Noncash Acquisitions
Assets acquired in noncash transactions are valued at the fair value of the assets given or the fair value of the assets received, whichever is more clearly evident. The total purchase price is allocated in proportion to the relative fair values of the assets required.
issue securities journal entry
dr land
cr common stock (# of shares x par value)
paid in capital (PIC) (price x shares - above
calculation)
donated asset journal eentry
dr asset (record at fair value)
cr revenue
costs after acquisition additiions
dr Building (at cost)
cr cash
improvements with carrying value sell
cash
acc dep
loss
cr asset
gain
improvements with carrying value by]uy
dr asset
cr cash
improvements no carrying vLUE useful life extended
acc dep
cash
improvement no carrying value productivity increased
ASSET
cash
repairs
expense
cash
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