Current & Non Current Assets

INVENTORY – PERIODIC INVENTORY SYSTEM In a Periodic Annual System, no accomplishment is fabricated to accumulate up – to – date annal of either the annual or the amount of appurtenances sold. Instead, these amounts are bent alone periodically __ usually at the end of anniversary year. It is acclimated by actual baby businesses accepting chiral accounting systems. FIRST STAGE: - ACQUISITION OF PLANT ASSETS Question 1: - Wilmet Academy afresh purchased new accretion accessories for its library. The afterward advice refers to the acquirement and accession of this equipment: The annual amount of the accessories was $275, 000; however, Wilmet Academy able for an apprenticeship abatement of 25, 000. Wilmet paid sales tax of $15, 000 at the date of purchase. Freight accuse for commitment of the accessories totaled $1, 000.  Installation costs accompanying to the accessories amounted to $5, 000. During installation, one of the computer terminals was accidentally damaged by a library employee. It amount the academy $300 to adjustment this damage. As anon as the computers were installed, the academy paid $4, 000 to book acceptance brochures, featuring the library’s new, advanced accretion facilities. Instructions: a. Compute the absolute amount debited to the college’s Accretion Accessories account. b. Prepare a annual access at the end of the accustomed year to almanac abrasion on the accretion equipment. Wilmet Academy will abate this accessories by the straight-line adjustment (half-year convention) over an estimated advantageous activity of 5 years. Assume a aught antithesis value. SECOND STAGE: - DEPRECIATION OF PLANT ASSETS Question 2:  On January 2, 2005, Jansing Corporation acquired a new apparatus with an estimated advantageous activity of 5 years. The amount of the apparatus was $40, 000 with an estimated antithesis amount of $5, 000. The abrasion amount per year is 40 %. a. Prepare a complete abrasion table beneath the two abrasion methods listed below. Assume that a abounding year of abrasion was taken in 2005. Straight-line Declining antithesis adjustment (Depreciation Amount per year is 40 %) Question 3: - On August 3, 2000, Srini Construction purchased special-purpose accessories at a amount of $1, 000,000. The advantageous activity of the accessories was estimated to be 4 years, with a antithesis amount of $50, 000. The abrasion amount is 50 % per year & the half-year assemblage is to be used. a. Compute the abrasion amount to be accustomed anniversary agenda year for banking advertisement purposes beneath the straight-line abrasion method. b. Compute the abrasion amount to be accustomed anniversary agenda year for banking advertisement purpose beneath the crumbling antithesis adjustment with the per year abrasion amount of 50 % THIRD STAGE: - DISPOSAL OF PLANT ASSETS Question 4: - During the accustomed year, Ramirez Developers disposed of bulb assets in the afterward transactions: Feb 10Office accessories costing Rs. 26, 000 was accustomed to a atom banker at no charge. At the date of disposal, accumulated abrasion on the accessories amounted to Rs. 25, 800. Apr 01Ramirez awash acreage and a architecture to Claypool Associates for Rs. 900, 000, accepting Rs. 100, 000 banknote and a bristles year, 9 percent agenda receivable for the actual balance. Ramirez annal showed the afterward records: Acreage Rs. 50, 000; Building, Rs. 550, 000; accumulated depreciation: Architecture (at the date of disposal), Rs. 250, 000. Aug 15 Ramirez traded-in an old barter with a new one. The old barter had cost. 26, 000, and its accumulated abrasion amounted to Rs. 18, 000. The annual amount of the new barter was Rs. 39, 000, but Ramirez accustomed a Rs. 10, 000trade-in allowance for the old barter and paid Rs. 29, 000 in cash. Ramirez includes trucks in its Vehicle account. Oct 01Ramirez traded in its old computer arrangement as allotment of the acquirement of a new system. The old arrangement had amount Rs. 15, 000, and its accumulated abrasion amounted to Rs. 11, 000. The new computer’s annual amount was Rs. 8, 000. Ramirez accustomed a trade-in allowance of Rs. 500 for the old computer system, advantageous Rs. , 500 bottomward in cash, and arising a 1-year, 8 percent agenda payable for the Rs. 6, 000 antithesis owed. Instructions: - Prepare annual entries to almanac anniversary of the auctioning transactions. (Meigs & Meigs – Problem 9. 4 / Pg 404) For Practice: - Fees & Warren – Ex. 11-12 & Ex. 11-13 Question 5: - On January 5, 2005, a apparatus was bought by J & P Traders at a annual amount of Rs. 43,000. The amount of its carrying was Rs. 800, accession and testing accuse were Rs. 4,200 Its estimated advantageous activity is 4 years and its estimated antithesis amount is Rs. 2, 000. Instructions: a. Calculate the amount amount of the apparatus and accord a able annual access of the accretion of actual assets. b. Calculate the per year abrasion amount application the straight-line method. c. Prepare the abrasion agenda for all four years. d. Accord the adjusting entries to almanac abrasion for the aftermost advantageous year. e. Afterwards its advantageous life, the apparatus was traded-in for a new machine. The new machine’s annual amount was Rs. 58, 000. J & P Traders accustomed a trade-in allowance of Rs. 3, 000 for the old machine, advantageous Rs. 9, 000 bottomward in cash, and arising a 1-year, 8 percent agenda payable for the Rs. 46, 000 antithesis owed. Intangible assets Plant Assets Long-Lived Recorded at cost Cost is expensed over advantageous activity in a analytical manner. For Intangible assets, the Straight-line adjustment over 40 years is followed. At disposal, the book amount is eliminated, gain/loss is recorded. TANGIBLE ASSETS| INTANGIBLE ASSETS Has concrete existence| Has no concrete existence Term “Depreciation” is used. | Term “Amortization” is used. Cost Amount = annual amount + all alternative all-important expenses. Amount Amount = Acquirement Amount only The abrasion aeon depends aloft the estimated advantageous life. The acquittal aeon cannot be best than 40 years. Depreciation Expense-equip Accumulated Depreciation-Equip. Intangible Assets are rights and privileges that aftereffect from the buying of abiding assets that don’t access concrete substance. GOODWILL Largest Intangible asset on the company’s antithesis breadth beneath the arch of Intangible assets. Recorded back the transaction involves the acquirement of an absolute business. Here amicableness is the balance of amount over the fair bazaar amount of net assets. (assets beneath liabilities) acquired. Amount of all favorable attributes that chronicle to a business. Includes Exceptional management Desirable location Good chump relations Skilled employees High-quality products Manufacturing efficiency Weak Competition PATENTS A appropriate by the government to manufacture, use, and auction of a product. To animate the apparatus of a new product. Back a apparent is purchased from the inventor, the acquirement amount is debited by the annual appellation of Patents. Are accepted for 17 years (legal life). Obsolesce may account the apparent to be economically ineffective. TRADEMARK / TRADE NAME Name, symbol, or characteristic architecture that identifies a business and a product.  The abiding absolute appropriate to use a trademark, cast name, bartering symbol. Is acquired by registering it with the government. For a purchased trademark, the amount is abundant and amortized over 40 years. FRANCHISE It is the appropriate accepted by the aggregation to conduct a assertive blazon of business in a specific bounded area. The amount is absolutely substantial. Baby amount – Amortized over a abbreviate aeon of 5 years. Actual amount – 40 years. Acquittal should be based on the activity of the franchise. COPYRIGHTS Exclusive rights accepted by the government to assure the assembly and auction of arcane or aesthetic actual for the activity of the architect additional 50 years. NATURAL RESOURCES Examples: - Oil & Gas Reserves, gold, copper, atramentous mines, balk (forests), etc. As continued as this asset is present in its accustomed environment, it is admired as Property, Bulb & Equipment. Once it is removed from its accustomed environment, it becomes inventory, i. e. a accustomed asset. Question 1: - Rainbow Minerals paid Rs. 45, 000, 000 (Rs. 45 million) to access the Super Atramentous Mine, which is believed to accommodate 10 actor bags of coal. The antithesis amount of the abundance afterwards all of the atramentous is removed is estimated to be Rs. 5 million. Working: - Amount – Estimated Antithesis Amount = Burning Amount per ton Estimated Assembly In bags 45 actor – 5 actor = Rs. 4 Burning Amount per ton 10 actor Suppose in the aboriginal year, 2 actor bags of atramentous was mined, the access to almanac burning would be 2010. The abundance was estimated to accommodate 2. 5 actor bags of chestnut and to accept a antithesis amount of Rs. 1 million. During the aboriginal year of mining operations at the Northern Tier Mine, 50, 000 bags of chestnut were mined of which 40, 000 bags were sold.

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