Chapter 16 Plant Assets（课件）-《实用会计英语》同步教学（大连理工大学出版社）

PLANT ASSETS CHAPTER 16 16-1 2 2 Long-term assets Long-term assets Tangible assets Natural resources Intangible assets e.g. plant, buildings, and equipment 16-1 Tangible assets Tangible assets Fixed assets Plant assets Plant assets are remained for operations of business, not for resale. The useful life of plant assets is more than one year. 16-1 3 3 Depreciable asset The value of plant assets may decline due to general wear and tear. A decline in revenue-producing ability may also occur because of obsolescence. 16-1 Depreciation Under the matching rule, the cost of plant assets must be allocated to all the periods over their useful life, and must be done in a "systematic and rational" manner. 1 year 2 year 16-1 Depreciation Before computing depreciation, it’s essential to determine The cost Residual value Depreciable cost Estimated useful life 16-1 Cost Acquisition cost The cost of plant asset Original cost = = It includes all expenditures reasonable and necessary to get the plant asset in place and available for use. 16-1 Cost If a plant asset is acquired for cash, the acquisition cost consist of: the cash paid for the asset expenditures for packing freight insurance in transit installation testing value added tax other necessary related costs 16-1 Cost If a plant asset is acquired by self-construction the acquisition cost consist of : Direct labor direct materials direct machinery equipment cost Other expenses incurred in the course of construction 16-1 Cost If a plant asset is acquired from donation the acquisition value includes : fair value all the expenses incurred during the period when the donation is received Fair value refers to the amount which is agreed by two sides that are familiar with the transaction. 16-1 4 3 Cost If a plant asset is purchased on credit the interests are not included in cost, but as expense for this period. However, if the assets are constructed, the interests during the construction should be cal