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Chapter 8 - Capital Assets.pdf

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Ryerson University
ACC 100
Else Grech

Chapter 8 - Capital Assets 12:55 PM Basket Purchases Dr. Land Dr. Building Cr. Cash DepreciationMethods All methods When asset is purchased: Dr. Equipment Cr. Cash or Accounts Payable Record periodic depreciation expense Dr. Depreciation Expense Cr. Accumulated Depreciation(contra-asset) Straight-line Depreciationexpense = Cost - Estimated residual value / Estimateduseful life Accelerated Depreciation DepreciationExpense = (Cost - Accumulated depreciation at the beginning of the period) * Rate Usage-Based Depreciation:Units of Production Depreciationexpense = (# of units produced in the period / estimated # of units) * (cost - estimated residual value) Goodwill - when one companypurchases all or a majorityof the shares of another company and pays more than the fair value of the assets and liabilities of the purchased company Therefore,Goodwill = Purchase Price - Fair Value of identifiable assets and liabilities purchased Sale of Capital Assets Carrying amount = Cost - Accumulated depreciation Sold during year = part-year depreciation expense i.e. sold one quarter of the way through the year = depreciation expense * 0.25 Sale Date - Proceedsfrom sale - carrying amo
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