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UT Knoxville ACCT 200 - Chapter 7 continued
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ACCT 200 Outline of Last Lecture I. ExpendituresII. Expenditures TableIII. Recording an assetIV. CapitalizationV. Land or Land Improvement?VI. DepreciationOutline of Current Lecture I. Some DefinitionsII. Double Declining Balance Method ExampleIII. Disposal of Fixed AssetsCurrent LectureI. Some Definitionsa. Accumulated depreciation—contra assetb. Net book value = historical cost – accumulated depreciationc. Accumulated depreciation at end of useful life = depreciable costd. Book value at end of useful life = residual valuee. NEVER depreciate below residual valueII. Double Declining Balance Method ExampleGiven that Historical Cost = \$330,000 with 5 years of useful lifeThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Annual depreciation expenseYear end accumulated depreciationYear end book value2014 \$132,000 \$132,000 \$198,0002015 \$79,200 \$211,200 \$118,8002016 \$47,520 \$258,720 \$71,2802017 \$28,512 \$287,232 \$42,7682018 \$24,768 \$312,000 \$18,000(330,000 – 0) x (2/5) = 132,000(330,000 – 132,000) x (2/5) = 79,200(330,000 – 132,000 – 79,200) x (2/5) = 47,520(330,000 – 132,000 – 79,200 – 47,520) x (2/5) = 28,512**In the first year, accumulated depreciation always equals 0.III. Disposal of Fixed Assetsa. Gains—selling price > book valueb. Losses—selling price < book valuec. Steps in recording fixed asset disposali. Catch up depreciation to the end of the previous period1. Increase depreciation expense2. Increase accumulated depreciationii. Record the disposal1. Increase cash/asset received (+)2. Decrease accumulated depreciation (+)3. Decrease asset disposed of (-)4. Increase gain or loss on sale (+/-)d. To catch up depreciation since the end of the last full year (amount of 1 year ofdepreciation) x (# remaining months you had it/12)e. Gain / (Loss) = selling price – net book

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# UT Knoxville ACCT 200 - Chapter 7 continued

Type: Lecture Note
Pages: 3
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