Matakuliah
Tahun
: V0232 – Akuntansi Keuangan Hotel
: 2009
Hospitality Financial Accounting
Week 11
Long-Term and
Intangible Assets
13-1 Major Classes of Long-Term Assets
Land
Land Improvements (Parking Lot)
• Cash price
• Net removal cost of warehouse
• Attorney’s fees
• Real estate broker’s commission
• Paving
• Fencing
• Lighting
Determining the Cost of Plant Assets
Buildings
• Purchase price
• Closing costs (attorney’s fees, title insurance, etc.)
• Broker’s commission
• Costs to make ready (remodeling, repair to roof, floors, wiring and plumbing)
• Interest costs incurred to finance project (when time is required and effects material.
Equipment
• Cash purchase price (invoice less discount taken)
• Freight charges
• Insurance during transit paid by the purchaser
• Sales tax
• Necessary installation and testing cots
13-2 Straight-Line Depreciation
Formula for
Straight-Line
Method
Cost
-
Salvage Value
=
Depreciable Cost
Depreciable Cost
÷
Useful Life
(in years)
=
Depreciation Expense
Example:
COST:
$20,000
SALVAGE:
$2,000
LIFE:
5 years
Cost
Salvage Value
-
$20,000
$2,000
Depreciable Cost
Year
Depreciable
Rate
$18,000
Useful Life (in years)
÷
Depreciation
=
$18,000
Depreciation
Schedule
Depreciable Cost
=
5
$3,600
Depreciation
1
$18,000
X
20%
$3,600
2
$18,000
X
20%
$3,600
3
$18,000
X
20%
$3,600
4
$18,000
X
20%
$3,600
5
$18,000
X
20%
$3,600
PLANT ASSET
20,000
ACCUMULATED DEPRECIATION
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
3,600
3,600
3,600
3,600
3,600
3,600
$18,000
Bal.
18,000
13-3 Units-of-Activity Depreciation
Formula for
Units-of-Activity
Method
Depreciable Cost
÷
Total Units of Activity
=
Depreciation Cost per
Depreciation Cost per
X
Units of Activity during
=
Depreciation Expense
Example:
Depreciable Cost
COST:
$20,000
SALVAGE:
$2,000
LIFE:
10,000 units
Total Units of Activity
÷
$18,000
10,000
Depreciation Cost per
Year
Cost / Unit
Units / Activity
$1.80
Units of Activity during
X
Depreciation
=
$1.80
Depreciation
Schedule
Depreciation Cost
=
2,5000
$4,500
Depreciation
1
$1.80
X
2,500
$4,500
2
$1.80
X
2,800
$5,040
3
$1.80
X
1,100
$1,980
4
$1.80
X
1,900
$3,420
5
$1.80
X
1,700
$3,060
10,000
$18,000
PLANT ASSET
20,000
ACCUMULATED DEPRECIATION
Year 1
Year 2
Year 3
Year 4
Year 5
Bal.
4,500
5,040
1,980
3,420
3,060
18,000
13-4 Declining-Balance Depreciation
Formula for
Declining-Balance
Method
Book Value at
Year
X
Declining-Balance Rate
=
Depreciation Expense
Example:
COST:
$20,000
SALVAGE:
$2,000
LIFE:
5 years
Book Value at
Declining-Balance Rate
X
$20,000
Depreciation
Schedule
Year
Depreciation
=
40%
$8,000
* 1/5 X 2 = 40% (double declining)
Book Value at
Year
Rate
Depreciation
1
$20,000
X
40%
$8,000
2
12,000
X
40%
$4,800
3
7,200
X
40%
$2,880
4
4,320
X
40%
$1,728
5
2,592
X
Plug
$592
PLANT ASSET
20,000
ACCUMULATED DEPRECIATION
Year 1
Year 2
Year 3
Year 4
Year 5
Bal.
$18,000
8,000
4,800
2,880
1,728
592
18,000
13-5 Sum-of-Years’ Digit Depreciation
Formula for Sumof-Years’ Digit
Depreciable Cost
X
Years’ Digits in Reverse Order ÷
Sum of Years’ Digits
=
Depreciation Expense
Example:
COST:
$20,000
Depreciable Cost
SALVAGE:
$2,000
$18,000
LIFE:
5 years
Depreciation
Schedule
Year
Book Value at Beginning of
Year
Rate
X
Years’ Digits in Reverse Order ÷ Sum
of Years’ Digits
5/15
Depreciation Expense
1
$18,000
X
5/15
$6,000
2
18,000
X
4/15
$4,800
3
18,000
X
3/15
$3,600
4
18,000
X
2/15
$2,400
5
18,000
X
1/15
$1,200
$18,000
PLANT ASSET
20,000
=
Depreciation Expense
$6,000
ACCUMULATED DEPRECIATION
Year 1
Year 2
Year 3
Year 4
Year 5
Bal.
6,000
4,800
3,600
2,400
1,200
18,000
13-6 Comparison of Depreciation
Methods
ANNUAL DEPRECIATION EXPENSE
Year
Straight Line
Units-of Activity
Declining-Balance
Sum-of-Years’-Digits
1
$3,600
$4,500
$8,000
$6,000
2
3,600
5,040
4,800
4,800
3
3,600
1,980
2,880
3,600
4
3,600
3,420
1,728
2,400
5
3,600
3,060
592
1,200
$18,000
$18,000
$18,000
$18,000
13-7 Revenue and Capital Expenditures
EXPENDITURES
Revenue
Expenditures
Capital
Expenditures
Ordinary Repairs
Additions and Improvements
• Maintains operating efficiency and expected productive life
• Generally small amounts that occur frequently
• Examples – motor tune-ups, oil changes, small repairs
• Increases operating efficiency or expected useful life
• Asset account is debited
• Examples – new wing to building or paneling of open pickup truck
i.e., minor truck repair and oil change; $52
i.e., storage racks are installed on delivery truck for $2,000
Repairs Expense
Cash
52
Delivery Trucks
52
Cash
2,000
2,000
13-8 Long-Term Asset Disposals Retirements
Fully Depreciated Asset
Asset originally purchased on 1/1/07 is discarded on 1/1/10 and there is no salvage value.
Accumulated Depreciation – Equipment
Equipment
20,000
12/31/07
5,000
12/31/08
5,000
12/31/09
5,000
12/31/10
5,000
Bal.
20,000
Book Value = $0
Entry:
Accumulated Depreciation – Equipment
Equipment
20,000
20,0000
Note: When recording a plant asset disposal, the plant asset account is always credited and the related accumulated depreciation account
13-8 Long-Term Asset Disposals –
Retirements (continued)
Asset is Not Fully Depreciated
Asset originally purchased on 1/1/07 is discarded on 1/1/10 and there is no salvage value.
Accumulated Depreciation – Equipment
Equipment
20,000
12/31/07
5,000
12/31/08
5,000
12/31/09
5,000
Bal.
15,000
Book Value = $0
Entry:
Accumulated Depreciation – Equipment
15,000
Loss on Disposal
5,000
Equipment
20,000
13-9 Long-Term Asset Disposals – Sales
Asset Sold at a Gain
Asset originally purchased on 1/1/07 is discarded on 1/1/10 for $8,000.
Accumulated Depreciation – Equipment
Equipment
20,000
12/31/07
5,000
12/31/08
5,000
12/31/09
5,000
Bal.
15,000
Book Value = $5,000
Entry:
Cash
8,000
Accumulated Depreciation – Equipment
15,000
Equipment
20,000
Gain on Disposal
3,000
Calculation of gain or loss on disposal:
Cash proceeds
$8,000
Book value of asset
5,000
Gain on disposal
$3,000
13-9 Long-Term Asset Disposals – Sales (continued)
Asset Sold at a Loss
Asset originally purchased on 1/1/07 is discarded on 1/1/10 for $3,000.
Equipment
Accumulated Depreciation – Equipment
20,000
12/31/07
5,000
12/31/08
5,000
12/31/09
5,000
Bal.
15,000
Book Value = $5,000
Entry:
Cash
3,000
Accumulated Depreciation – Equipment
15,000
Loss on Disposal
2,000
Equipment
20,000
Calculation of gain or loss on disposal:
Cash proceeds
$3,000
Book value of asset
5,000
Gain on disposal
($2,000)
13-10 Long-Term Asset Disposals –
Exchange of Similar Assets
Asset Exchanged at a Loss
Asset originally purchased on 1/1/07 is exchanged for a similar asset on 1/1/10. Cash of $10,000 is also paid and the old asset has fair
Accumulated Depreciation – Equipment
Equipment
20,000
12/31/07
5,000
12/31/08
5,000
12/31/09
5,000
Bal.
15,000
Book Value = $5,000
Entry:
Equipment (new)
14,000
Accumulated Depreciation – Equipment
15,000
Loss on Disposal
1,000
Equipment (old)
20,000
Cash
10,000
Cost of new asset acquired:
Loss on exchange of old asset:
Fair value of old asset
$4,000
Fair value of old asset
$4,000
Cash paid
10,000
Book value of old asset
5,000
Cost of new asset
$14,000
Loss on disposal
($1,000)
13-10 Long-Term Asset Disposals –
Exchange of Similar Assets (continued)
Asset Exchanged at a Gain
Asset originally purchased on 1/1/07 is exchanged for a similar asset on 1/1/10. Cash of $10,000 is also paid and the old asset has fair
Accumulated Depreciation – Equipment
Equipment
20,000
12/31/07
5,000
12/31/08
5,000
12/31/09
5,000
Bal.
15,000
Book Value = $5,000
Entry:
Equipment (new)
15,000
Accumulated Depreciation – Equipment
15,000
Equipment (old)
20,000
Cash
10,000
Cost of new asset acquired:
Gain on exchange of old asset:
Fair value of old asset
$8,000
Fair value of old asset
$8,000
Cash paid
10,000
Book value of old asset
5,000
$18,000
Less: Gain on disposal
3,000
$15,000
Gain on disposal
$3,000
13-11 Intangible Assets
Amortization Period, the Shorter of
Asset Type
Legal Life
Minimum
Maximum
Patents
20 years
Useful life
20 years
Franchise & Licenses
By contract of indefinite
Useful life
40 years
Copyrights
Life of creator plus 50 years
Not Amortized
Goodwill
Indefinite
Not Amortized
Trademarks &
Indefinite
Not Amortized