Capital Assets
What is the first two steps when getting rid of a capital asset
1) Update depreciation to the date you are disposing
2) Calculate Book Value (Carrying Amount)
What lake does Ms. Hendry gather her sap
What is Galla Lake?
What is the formula for straight line depreciation
(cost - salvage)/useful life
Why might you revise depreciation (2 reasons)
Make the asset better (capital expenditure)
Value of asset decreases (impairment)
Changes in depreciation method
Salvage value or estimated life changes
What does PPE stand for?
Plant Property and Equipment
How many litres of sap do you need to make 1 litre of maple syrup.
40
What is always the transaction for depreciation
DR Depreciation Expense
CR Accumulated Depreciation - asset
if there is an impairment - what is the JE
DR Impairment Loss
CR Accumulated Depreciation
Do we include legal expenses in the cost of a capital asset
What is YES
What is the sugar content of Maple Syrup
68
If a asset has a 4 year useful life - what is it's double diminishing depreciation rate
4 years = 25%
double = 50%
If a business closes, the claims of these individuals are settled first.
Who are creditors?
What do we include in the cost of a purchase of a capital asset?
All of the things required to get it ready for use
(tear down, selling stuff that was found, legal expenses, interest expense...)
refractometer
What are the forumulas for units of production
(cost - salvage)/estimated units of production = depreciable amount per unit
Depreciable amount per unit * units of production used in the period
What is the JE if their is a loss when you get rid of an asset
DR Cash
DR Acc Dep
DR Loss on Disposal
CR PPE Account
If you purchased land, building and equipment for $400,000. The land was appraised at 135K, Building 270K and equipment 45K - what is the JE for this purchase
DR Land 120000
DR Building 240000
Dr Equipment 40000
CR Cash 400000
how many years has ms. hendry been making maple syrup
4
Which type of depreciation has the greatest impact on profit over the life of the asset
over the life of the asset - impact on profit is the same regardless of depreciation method used.