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Fixed Assets Cheat Sheets

This document discusses various methods for accounting for fixed assets, including determining cost, depreciation methods, disposal of assets, depletion expense, and intangible assets. It provides formulas and journal entries for straight-line, units-of-activity, and declining balance depreciation methods. It also outlines the journal entries and steps for retirement, sale, and exchange of fixed assets.

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Sarah Safira
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338 views

Fixed Assets Cheat Sheets

This document discusses various methods for accounting for fixed assets, including determining cost, depreciation methods, disposal of assets, depletion expense, and intangible assets. It provides formulas and journal entries for straight-line, units-of-activity, and declining balance depreciation methods. It also outlines the journal entries and steps for retirement, sale, and exchange of fixed assets.

Uploaded by

Sarah Safira
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Fixed Asset

Determining the cost of plant assets


Record at cost except license (expense) and insurance policy (prepaid)
Journal : Fixed Assets
Cash
Depreciation methods
STRAIGHT-LINE METHOD
Formula:
Annual Depreciation
Cost - Residual Value ÷ Useful life (in years) =
Expense
Depreciation schedule :

UNITS-OF-ACTIVITY
Formula :
Total Units of Units of Activity during Annual Depreciation
Depreciable Cost ÷ × =
Activity the Year Expense
Depreciation schedule :

DECLINING-BALANCE
Formula :
Book Value at Declining Annual Depreciation
× =
Beginning of Year Balance Rate Expense
Depreciation schedule :
DDM Rate :
100%
×2
𝑈𝑠𝑒𝑓𝑢𝑙 𝑙𝑖𝑓𝑒

Journal : Depreciation Expense


Accumulated Depreciation Expense
Disposal of plant assets
RETIREMENT OF ASSETS
(fully depreciated) Eliminate asset (no value = no loss/gain)
Journal : Accumulated Depreciation
Fixed assets
(not fully depreciated) Eliminate asset + record loss/gain from remaining book value
Journal : Accumulated Depreciation
Loss on disposal of plant assets
Gain on disposal of plant assets
Fixed assets

SALE OF ASSETS
Step 1: Record depreciation up to date sale
Journal : Depreciation expense Gain = Cash from sale > BV at
Accumulated depreciation disposal
Step 2 : Eliminate asset + record gain/loss on sale Loss = Cash from sale < BV at
Journal : Cash disposal
Accumulated depreciation
Loss on sale of plant assets
Fixed assets
Gain on sale of plant assets

EXCHANGE OF ASSETS
Step 1 : Calculate cost of new asset
New asset <--> Fair value of old asset + Cash
Step 2 : Calculate gain/loss
Fair value old asset - book value old asset
Journal : Asset (new)
Accumulated depreciation (old)
Loss on disposal
Asset (old)
Gain on disposal
Cash

Depletion expense
Formula :
Total Cost minus Total Estimated × Number of Units Annual Depletion
÷ =
Residual Value Units Extracted and Sold Expense
Journal : Depletion expense
Accumulated depletion

Intangible assets
Initial journal entry: Intangible asset Journal entry (annual): Amortization expense
Cash Intangible asset
Annual Amortization
Cost ÷ Useful Life =
Expense

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