ACG 2021Chapter 7Summary

Correlations

Exam1 Exam_2 Total_Cmaps SL1 SLHW2 SL3 TotalMAL MALWorked Exam1 Pearson Correlation 1 .605(**) .219(**) .141(**) .111(**) .166(**) .376(**) .323(**)

Sig. (2-tailed) .000 .000 .001 .008 .000 .000 .000 N 731 717 706 548 560 532 720 720

Exam_2 Pearson Correlation .605(**) 1 .149(**) .174(**) .139(**) .158(**) .268(**) .358(**) Sig. (2-tailed) .000 .000 .000 .001 .000 .000 .000 N 717 744 716 557 568 539 733 733

Total_Cmaps Pearson Correlation .219(**) .149(**) 1 .177(**) .068 .097(*) .467(**) .220(**) Sig. (2-tailed) .000 .000 .000 .104 .024 .000 .000 N 706 716 731 561 570 542 725 725

SL1 Pearson Correlation .141(**) .174(**) .177(**) 1 .156(**) .090(*) .171(**) .110(**) Sig. (2-tailed) .001 .000 .000 .000 .049 .000 .009 N 548 557 561 566 508 479 563 563

SLHW2 Pearson Correlation .111(**) .139(**) .068 .156(**) 1 .124(**) .042 .068 Sig. (2-tailed) .008 .001 .104 .000 .005 .316 .102 N 560 568 570 508 574 509 571 571

SL3 Pearson Correlation .166(**) .158(**) .097(*) .090(*) .124(**) 1 .196(**) .094(*) Sig. (2-tailed) .000 .000 .024 .049 .005 .000 .028 N 532 539 542 479 509 545 543 543

TotalMAL Pearson Correlation .376(**) .268(**) .467(**) .171(**) .042 .196(**) 1 .261(**) Sig. (2-tailed) .000 .000 .000 .000 .316 .000 .000 N 720 733 725 563 571 543 749 749

MALWorked Pearson Correlation .323(**) .358(**) .220(**) .110(**) .068 .094(*) .261(**) 1 Sig. (2-tailed) .000 .000 .000 .009 .102 .028 .000 N 720 733 725 563 571 543 749 749

** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed).

Tangible• Land• Land

Improvements• Buildings• Equipment• Vehicles Natural Resources

• Actual Ownership

• Rights to Mine

Intangibles• Patents• Copy Rights• Trade Marks

Long-Term Assets (PP&E)

All Costs Associated with Purchase of Asset◦ Costs needed to use Asset for Intended

Purpose

Allocating Costs

Lump-Sum (Basket) Purchase

Determine Market

(Appraised) Value of each

Asset separately

Determine relative % of each assets

Market Value to Total Market

value

Multiply market value % (weight)

by Lump-Sum Cost

What if you buy Multiple Assets Together?

Assets:◦ Economic Resources that provide a future Benefit◦ Benefit provided by Long-Term Assets

Revenue Matching Principle

◦ Record any costs associated with Revenue Earned in the Period

◦ Consumption of Assets are a Cost, so we must Expense

What happens when you use up an Asset?

Depreciation• Tangible Asset

Depletion• Natural Resource

Amortization• Intangible

Expense is Called

•(Cost – Residual Value) / Useful Life

Straight Line

•(Cost – Residual Value) / Total Units

•Cost per Unit x Units Produced

Units of Production

•2 x SL Rate = 2 x (1/Useful Life)

•Book Value x 2xSL rate

Double Declining Balance

Depreciation Methods

Deprecation Expense xxxx Accumulated Depreciation xxxxxx

Accumulated Depreciation is a◦ Contra Asset

Asset – Accumulated Depreciation =◦ Book Value of the Asset

Accounting Transaction

Capital Expenditure◦ Add Cost to existing Asset and depreciate

Rules:◦ Capital Expenditures

Increase the capacity of the asset It can do more

Drive more, make more copies, produce more widgets Increase the useful life of the asset

It will last longer

◦ Immediate Expense Maintenance costs or Restoration costs

Capital Expenditure vs. Immediate Expense