Slide9-6Acquisition of Plant AssetsAssetpriceCostReasonableandnecessary costs.forgetting..forgettingthe asset to thethe asset readyfor use.desired location
Slide 9-6 Acquisition of Plant Assets Asset price Reasonable and necessary costs . . . . . . for getting the asset to the desired location. . . . for getting the asset ready for use. Cost
Slide9-7CostDeterminingExample$52,000List price4,160Salestax @ 8%500Transportation cost1,300Set-upTesting4,000$61.960Total costto HeatCo.DateDebitCreditDescriptionPrepare the journal entry
Slide 9-7 Determining Cost Example List price $ 52,000 Sales tax @ 8% 4,160 Transportation cost 500 Set-up 1,300 Testing 4,000 Total cost to Heat Co. $ 61,960 Date Description Debit Credit Prepare the journal entry
Slidee09-8CostDeterminingExample$52,000List price4,160Salestax @ 8%500Transportation cost1,300Set-upTesting4,000$61.960Total costto HeatCoDateDebitCreditDescription4-May61,960NewMachineCash61,960
Slide 9-8 Determining Cost Example List price $ 52,000 Sales tax @ 8% 4,160 Transportation cost 500 Set-up 1,300 Testing 4,000 Total cost to Heat Co. $ 61,960 Date Description Debit Credit 4-May New Machine 61,960 Cash 61,960
Slide9-9DepreciationThe allocation of the cost of aplant asset to expense in theperiods in which services are received from the asset.BalanceSheetCostofAssets:Plant andplantassetsequipmentastheservicesIncomeStatementare receivedRevenues:Expenses:Depreciation
Slide 9-9 Depreciation The allocation of the cost of a plant asset to expense in the periods in which services are received from the asset. Cost of plant assets Balance Sheet Assets: Plant and equipment Income Statement Revenues: Expenses: Depreciation as the services are received
Slide9-10Depreciationa Book ValueI Cost - Accumulated Depreciationa Accumulated DepreciationContra-assetRepresents the portion of anasset's cost that has alreadybeen allocated to expense.aCausesof DepreciationI Physical deteriorationObsolescence
Slide 9-10 ä Book Value l Cost - Accumulated Depreciation ä Accumulated Depreciation l Contra-asset l Represents the portion of an asset’s cost that has already been allocated to expense. ä Causes of Depreciation l Physical deterioration l Obsolescence Depreciation