Chapter 10- Capital Assets Flashcards
Journal entry to record selling of equipment at a loss
Cash
Accumulated Ammortization
Loss on disposal
Equipment
Journal entry to record selling of equipment at a gain
Cash
Accumulated Ammortization
Gain on disposal
Equipment
How to revise ammortization part way through useful life
Net book value-revised residual value / remaining useful life
How do you record a cost to the asset that happens once or multiple times?
Once- cost of asset
Multiple- expense/prepaid debited
How do you calculate the straight line method of amm. ?
Cost-residual value / useful life
How to calculate declining-balance method of amm.
Book value x ammortization rate(1/useful life)
How to use the units of activity method of amm.
Cost-residual value / total # of units x total units for the year
What factors exist for ammortizing assets?
Physical factors (wear and tear) Economic factors (being out of date)
How are patents ammortized?
Over their useful/legal lives whichever is shorter
What is the journal entry to record patent ammortization?
Ammortization Expense
Patents
How to calculate asset turnover?
Net sales/ average total assets
How to calculate return on assets
Net income/ average total assets
How to allocate costs of capital assets
land/ land+building= %
building/ land+building = %
amount paid x %
amount paid x %
What is the difference between operating and capital expenditures?
Operating: Ordinary repairs and maintenance (Repairs expense)
Capital: Additions and improvements (adds to value of asset)
