Principles of Accounting: Chapter Ten

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Chapter 10 expands upon the basic principles of accounting for property, plant, and equipment that have been introduced throughout earlier chapters. The chapter begins by elaborating on the concepts that govern the types of costs that are properly included with PP&E. Special situations, such as the lump-sum purchase of a group of assets is described. This is followed by a general discussion of service life, and other concepts and terminology that are essential to understanding the process of allocating the cost of productive assets to many time periods.

The conceptual discussion provides a foundation for the ensuing discussion that looks at the specifics of both straight-line and accelerated depreciation approaches. Coverage includes fractional period depreciation and utilization of spreadsheet routines for calculating depreciation. The chapter also covers the less widely applicable units-of-output depreciation approach. The chapter provides brief coverage to establish an awareness of unique facets of cost allocation that uniquely applicable under tax codes, and closes with general commentary on accounting for equipment leases.

Exercises

To aid in your understanding of this chapter, exercises with solutions are available for free download at Bookboon.com. You will find these exercises very helpful in providing models and guidelines for solving all of the problems at principlesofaccounting.com.

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Problems
Goals Achievement
Fill in the Blanks
Multiple Choice
Objectives
Key Terms

Problems: Chapter Ten

Obtain the entire Long-Term Assets Problem Workbook via the linked image at left. Our high volume production process makes this an economical option as compared to printing these files on your own printer!



Basic		Problem	Worksheet	Combined	Objective

	B-10.01				Balance sheet presentation of property, plant & equipment

	B-10.02				Determining asset acquisition cost and recording

	B-10.03				Identification of capital expenditures

	B-10.04				Lump sum purchase price allocation

	B-10.05				Lease classification

	B-10.06				Straight-line depreciation

	B-10.07				Units-of-output depreciation

	B-10.08				Double-declining balance depreciation

	B-10.09				Change in estimate for depreciation



Involved		Problem	Worksheet	Combined	Objective

	I-10.01				Terminology and concepts

	I-10.02				Evaluation of property, plant, and equipment

	I-10.03				Depreciation calculations with alternative methods

	I-10.04				Fractional year depreciation calculations

	I-10.05				Using spreadsheet software for depreciation calculations

	I-10.06				Team-based analysis of depreciation methods used

The preceding table includes links to "Basic" and "Involved" problems. Each link will download the file containing a spreadsheet for the problem and a template worksheet on which you can prepare the solution electronically. If you see a light bulb icon on a worksheet, just mouse over above the icon and a comment box will appear. The comments include useful suggestions for improving your spreadsheet skills.

Solutions to these problems may be obtained from your instructor, however you may not post or redistribute, electronically or otherwise, any such solution material. Solution material may be provided to you for your sole use only, at the discretion of your individual instructor. Violation of this policy constitutes a copyright violation. Alternative problems, with solutions, may be found under the "Exercises" tab within each chapter. Video solutions to selected problems are available to students enrolling in the online course.