Please enable JavaScript.
Coggle requires JavaScript to display documents.
Fixed Assets (Capitalized Acquisition Costs (Equipment) (Fees (Shipping,…
Fixed Assets
Capitalized Acquisition Costs (Equipment)
Includes all expenditures to get the asset into "working condition" and ready for use
Purchase price + Liabilities assumed
Fees
Shipping
Taxes
Insurance
Testing
Legal
Construction Loan Interest
Alternations to accomandate new equipment
Installation to increase life and efficiency
Only R+D Costs are expensed in the period incurred
Double-Declining Balance (DDB)
1/(Useful Life) x 2 x Book Value
Ignores Salvage Value
Example
Cost 10k
Useful life 10 years
Vassalage Value 1k
Answer: 1/(10) x 2: Basically SL method % x 2
If in year, DDB depreciation is < SL method, use SL method instead
Yearly Depreciation amount
Year 1
10K x (1/10 x2)
Year 2
10k - ACD x (1/10 x 2)
Donated Property
Donee
Recorded at Fair Value + Cost to get to working condition
Tip: Think charity holding a "fair" and therefore it is "fair value"
Donor
Recorded at Fair Value
Gain and loss are recorded
Capitalized Acquisition Costs (Building)
Includes all expenditures to get asset into working condition
Capitalized Acquisition Cost (Land)
Includes all expenditures to get land ready for intended use
Title and County Fees
Clearing the Land like Dirt work
Demolition and Removal of Buildings (minus any salvage)
Note: Capitalized Land Costs are NOT depreciated
Non-monetary exchanges
Cash flows
Not Significantly Different
Lacks commercial substance
No gains recognized
Only gain the boot or cash that came along with the transaction are recorded
New Asset = Book value of Old Asset
Significantly Different
Gain and losses recognized
Has commercial substance
New Asset = Fair Value of Old Asset