Non- Current Assets Flashcards
What are Plant Assets
Tangible Resources which have 3 aspects(physical substance, not intended for sale to customers, used in operations of business).
How are Plant Assets Recorded
At cost. This is all expenditures in acquisition and making ready for intended use
How is Land Recorded
At cost - purchase price, closing cost, attorney fees, other liens
Land Improvement
Structural additions e.g a driveway,parking lots,fence
How are Buildings recorded
At cost - Purchase/Consideration - price,closing cots,broker’s commission, permits etv
Doube Entry for Depreciation of a Plant Asset
DR: Depreciation Exp
CR: Accumulated Depreciation
Methods of Depreciation
- Straight Line Method
-Reducing / Declining balance
-Units of Activity
Straight Line Method
Cost - Salvage Value / Useful Life
Reducing Balance
NBV X Dep Rate
Units of Activity
- Dep cost p/u = depreciable cost / total estimate units over useful life
- Annual Dep Exp = Dep cost p/u x Units of activity during year
Characteristics of Depreciable Asset
Limited revenue producing ability
Limited useful life
Used in production/supply
expected to be used for <1 accounting period
Revaluation of NCA
DR: Asset
CR: Revaluation Reserve
(for increase in value)
Revenue Expense
cost charged against revenues e.g ordinary repairs
Capital Expense
Cost to increase useful life, operating efficiency, productivity
Double Entry for Natural Resources
DR: Depletion Expense
CR: Accumulated Depletion
