Slide9-1Chapter7Noncurrent Assets and Depreciation
Slide 9-1 Chapter 7 Noncurrent Assets and Depreciation
Slide9-2Plant AssetsLong-lived assets acquired for use inbusinessoperationsSimilartolong-termprepaid expensesDateDescriptionDebitCreditAsyearspass,and theThe cost of plant assetsservices are used,theis theadvance purchasecostis transferredtoofservicesdepreciationexpense
Slide 9-2 Plant Assets Long-lived assets acquired for use in business operations. Similar to long-term prepaid expenses The cost of plant assets is the advance purchase of services. Date Description Debit Credit As years pass, and the services are used, the cost is transferred to depreciation expense
Slide9-3Major Categories of Plant AssetsNaturalTangible PlantIntangibleAssetsAssetsResourcesLong-termNoncurrentassetsSites acquired forwithnophysicalextracting valuableassets havingphysicalsubstancesubstanceresources.Land, buildingsOil reserves,Patents,copyrightstimber, otherequipmenttrademarksfurniture,fixturesfranchises, goodwillminerals
Slide 9-3 Land, buildings, equipment, furniture, fixtures. Long-term assets having physical substance. Tangible Plant Assets Patents, copyrights, trademarks, franchises, goodwill. Noncurrent assets with no physical substance. Intangible Assets Oil reserves, timber, other minerals. Sites acquired for extracting valuable resources. Natural Resources Major Categories of Plant Assets
Slide9-4Accountable EventsEAcquisitionEAllocation of theacquisitioncosttoexpenseovertheasset's useful life(depreciation)Sale or disposal
Slide 9-4 Accountable Events ÊAcquisition. ËAllocation of the acquisition cost to expense over the asset’s useful life (depreciation). Ì Sale or disposal
Slide9-5Acquisition and Valuation of PP&EValued at Historical Cost,reasons include:At acquisition,cost reflects fair valueHistorical cost is reliableCompanies should not anticipate gains and losses butshould recognize gains and losses only when theassetis sold
Slide 9-5 At acquisition, cost reflects fair value. Historical cost is reliable. Companies should not anticipate gains and losses but should recognize gains and losses only when the asset is sold. Valued at Historical Cost, reasons include: Acquisition and Valuation of PP&E