DOC PREVIEW
UA ACCT 200 - Long Term Assets

This preview shows page 1 out of 3 pages.

Save
View full document
View full document
Premium Document
Do you want full access? Go Premium and unlock all 3 pages.
Access to all documents
Download any document
Ad free experience
Premium Document
Do you want full access? Go Premium and unlock all 3 pages.
Access to all documents
Download any document
Ad free experience

Unformatted text preview:

ACCT 200 1st Edition Lecture 14 Outline of Last Lecture I. ReviewII. BE 6-16Outline of Current Lecture I. Test InfoII. BE 7-1III. BE 7-2IV. Basket PurchaseV. Goodwill VI. BE 7-3VII. E 7-7VIII. BE 7-5IX. E 7-5X. BE 7-7Current LectureTest – ch 5-7; ch 6 is like 2 chapters and will be treated as such on testKnow multi-step income statement (net sales, gross profit, total operating expenses, operating income, income before taxes, net income), balance sheet (net acct rec, total current assets, net long term assets, total assets, total current liabilities, total liabilities, total equity and total liabilities + equityBE 7-1Land and warehouse 500,000Broker fee 30,000Title insurance 2000Closing costs 5000Demolish existing building 30,000Are any of these not included in cost of land? No, they are all included. 567,000 cost of landTitle insurance is different than annual insuranceBE 7-2Purchasing bread making machine 25,000Freight charges 1500Installation 3000Testing 1000Property taxes for first year 500 (annual property taxes)What is the cost of equipment? Include all but last entry, so 30,500 is cost of equipmentBasket Purchase:400,000 purchase priceFair market value150,000 land300,000 building50,000 equipmentLand 150/500*400,000=120,000Building 300/500*400,000=240,000Equipment 50/500*400,000=40,000Goodwill:Buy entire business: equipment 100, patent 10, debts -7, cash 5Worth 108Pay 12012 is goodwillHave to negotiate to find goodwillBE 7-3Pay 14 million for all existing shares of stock of a companyFair value of assets 11.3Fair value of debts 1.5Price paid 14Net value of assets 11.3-1.5=9.8So goodwill is 14-9.8=4.2 (millions)E 7-7Basic research costs 4,000,000 Engineering design cost 1,360,000Develop a prototype 600,000Testing and modifying prototype 400,000Legal fees for patent application 80,000Legal fees for defense of patent 40,000What is cost of patent? 80+40=120,000What is expensed? (not sellable yet) 4 mil + 1.36 mil + 600,000 + 400,000=6,360,000BE 7-5Annual maintenance on equipment – expenseRemodeling of offices – capitalize and add to costImprovement to shipping and receiving area (improves productivity) – capitalize and add to costAddition of security system – capitalize as its own assetE 7-5Machine 126,000Shipping 3000Testing 5000Installation 4000Cost is sum of all these items=138,000BE 7-7Cost of equipment 35,000Estimated salvage 5000Useful life 10 yearsPurchased on Sept 1, 2010Give depreciation for 2010 and 2011:Annual depreciation=(35,000-5000)/10=(cost-salvage)/life=3000 per full yearIn 2010, only owned for 4 months, so 3000*(4/12)=10002011=30002012=3000Journal entry:12/31/10 depreciation expense 1000accumulated depreciation 1000Book value at 12/31/10=35,000-1000=34,00012/31/11 depreciation expense 3000accumulated depreciation 3000Book value at 12/31/11=35,000-(1000+3000)=31,000 OR could think 34,000 prior year-3000 this


View Full Document

UA ACCT 200 - Long Term Assets

Download Long Term Assets
Our administrator received your request to download this document. We will send you the file to your email shortly.
Loading Unlocking...
Login

Join to view Long Term Assets and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Long Term Assets 2 2 and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?