ACCG101 Lecture Notes - Lecture 3: Write-Off, Dr Motor Company, Retained Earnings

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scarletsquirrel639

19 Jun 2018

School

Macquarie University

Department

Accounting and Corporate Governance

Course

ACCG101

Professor

Rajni MALA

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Non-current Assets (Ch. 21)

ACCG101 – Week 3

2015 Session 1 – Stanley & Rajni

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Learning Objectives

1. account for the revaluation of non-current assets, both

upwards and downwards (pp. 884–9)

2. account for the write-down of an impaired non-current

asset to recoverable amount (pp. 889–90)

3. account for the derecognition of non-current assets by

scrapping, by sale, or by exchange (pp. 890–4)

4. describe the nature of intangible assets and the

problems of accounting for them (pp. 899–903)

5. describe the nature of goodwill and how to account for

goodwill acquired by an entity (pp. 903–5).

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AASB 116 defines PPE as:

¾tangible items;

¾with a specific use within the entity;

¾that are expected to be used during more than one

period (ie. they are non-current in nature).

The nature of Non-Current Assets (PPE)

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Document Summary

Learning objectives: account for the revaluation of non-current assets, both upwards and downwards (pp. 884 9: account for the write-down of an impaired non-current asset to recoverable amount (pp. 889 90: account for the derecognition of non-current assets by scrapping, by sale, or by exchange (pp. 890 4: describe the nature of intangible assets and the problems of accounting for them (pp. 899 903: describe the nature of goodwill and how to account for goodwill acquired by an entity (pp. Aasb 116 (cid:137) cost recognised as an asset if: (cid:190) it is probable that economic benefits will flow to the entity, and (cid:190) the cost can be reliably measured. Measurement subsequent to initial recognition (cid:137) aasb 116 allows a choice of two possible measurement models: (cid:190) cost model; (cid:190) revaluation model. May be either upwards (increase) or downwards (decrease) Fair value is defined as the price that. Would be received to sell an asset in an.

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St. Payne Med Center is using the step-down method to allocatecosts. They have two support departments (Record Keeping andCleaning), and two patient service departments (Eye Care and DentalCare). Some of the Record Keeping costs are allocated to Cleaningbefore the support department costs are allocated to patientservice departments. Record Keeping costs are allocated based onthe number of employees, while Cleaning costs are allocated by thenumber or rooms. The following data has been collected:

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1. Produce a balance sheet for a company that distinguishesbetween current and non-current assets and liabilities.
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Create a BalanceSheet from the trial balance:
		Debits	Credits	Classification

	Cash	300,000.00		Current asset

	Sales		(10,000,000.00)	Income statement

	Cost of Goods Sold	7,000,000.00		Income statement

	Selling Expenses	500,000.00		Income statement

	Other income		(50,000.00)	Income statement

	Administrative expenses	350,000.00		Income statement

	Interest Expenses	12,500.00		Income statement

	Land	300,000.00		non-current asset

	Building	2,000,000.00		non-current asset

	Long Term bond payable		(550,000.00)	non-current liability

	Accrued Liabilities		(50,000.00)	current- liability

	Accumulated Depreciation Buildings		(250,000.00)	non-current asset

	Equipment	750,000.00		non-current asset

	Receivables	100,000.00		current asset

	Allowance for doubtful accounts		(7,500.00)	current asset

	Accumulated depreciation equipment		(125,000.00)	non-current asset

	Common Stock		(200,000.00)	equity

	Payables		(115,000.00)	current Liability

	Inventories	200,000.00		current asset

	Prepaid Expenses	50,000.00		current asset

	Retained Earnings		(215,000.00)	equity



		11,562,500.00	(11,562,500.00)



Assets		Equity and Liabilities

Current Assets		Current Liabilities





Total Current Assets	-	Total Current Liabilities	-




		Total long term Liabilities	-

Total property plant and equipment	-






		Total Equity	-


Total Assets	-	Total Equity and liabilities	-

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ACCG101 Lecture Notes - Lecture 3: Write-Off, Dr Motor Company, Retained Earnings

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