CHAPTER 9: Plant Assets, Natural Resources, and

3 types of long term assets: Property, plant, eq

Patents, Copyright

Natural recource

PPE:

Read IAS 16

FULL ASSETS' DEPRECIATION

Có 3 phương pháp trích khấu hao:
STRAIGHL LINE METHOD:

Step 1: Depreciable amount = Cost - Salvage value (giá trị thanh lý) 12,000
Step 2: Depreciation per year = Depreciable amount / Useful life ( in years) 2,400
Depreciation per month (if you like)

UNITS OF ACTIVITY (UNITS OF PRODUCTION) METHOD: (trích theo sản lượng)

Depreciation per unit = Depreciable amount/Total units of production (tổng sản lượng ước tín
Depreciation for 2020 (for example) = 20.000 miles x 0,12 = 2.400

Units of production just for 2020 (number of miles that the truck m
Remember: total units of production (here is number of miles during 5 years could not be over 100,000 miles

DECLINING BALANCE (DOUBLE DECLINING BALANCE) METHOD (DDB METHOD(theo số dư giảm dần)
Step 1: calculate straight line rate 1/thời gian sử dụng hữu ích 20%
Step 2: we double straighl line rate 40%
Step 3: apply 40% (double straight line rate) to calculate depreciation for each year.
Why we do it? Why we have to double the rate? -----> because some assets
have characteristics or features that they create much more revenue in the very first years than the later years of

Carrying
Depreciation Depreciation amount = book
Year Cost DDB rate for year accumulated value
1 13,000 40% 5,200 5,200 7,800 Note: here we start with 13.000 no
2 7,800 40% 3,120 8,320 4,680
3 4,680 40% 1,872 10,192 2,808
4 2,808 40% 1,123 11,315 1,685
5 1,685 40% 685 12,000 1,000 Note: 1.000 here is salvage value. W

New assumption: instead of buying the asset on Jan 1, 2020, I bought it on April 1, 2020. Pls calculate depre for 5 years.
Straigh line: Year 1: 1,800 Year 2, 3, 4, 5= 2,400 Year 6 =

Unit of production with my assumption: Depre per unit = 12.000/100.000 miles = 0,12
Year 2020: 12,000 miles
Year 2021: 30,000 miles
Year 2022: 30,000 miles
Year 2023 16,000 miles
Year 2024 12,000 miles Depreciable amount = 13.000-1.00
100,000
CHANGES IN ESTIMATES OF USEFUL LIFE AND SALVAGE VALUE
Useful life: 10 years
Cost 510,000 Depre for each year 50,000 each year
sal value 10,000 Total depre for first 7 years = 350,000

Year 8: sth changes, and we change:

Cost 510,000 The Carrying amount of the asset = 160,000
useful life 15 years The new depre for year 8 to year 15 = 19,375 each year
Sal value 5,000

For Natural resources we have to calculate Depletion not Depreciation

And, we only apply 1 method for computing Depletion,---> Units of production SFP:
Natural resources
Depletion per unit = (cost - Residual value)/total units of production Accum depletion
Depletion per year = Depletion per unit x Units of the year NBV

Dr INVENTORY B/c af ter extracting oil, gas, gold, coal,…..we use the materials to se
Cr ACCUMULated Depletion

INTANGIBLE ASSETS = INTANGIBLES

2 TYPES OF INTANGIBLES: some have limited useful life and some have unlimited useful life.
For Limited useful life Intangibles ---> 1. Calculate Amortization ex (the other name of Depreciation applied for Intangibles)
Mostly, we use straight line method for calculating Amortization
2. We also discard or dispose Intangibles like Tangibles at the end of useful life.

For unlimited useful life Intangibles: 1. We cannot compute the Amortization. In this case ---> Impairment loss an
2. Note: how can we reflect the reduce in value of this type of assets? ---> advance
Here in this case, instead of compute Amortization, we compute Impairment loss (

The last point for the chapter 9: During the useful life of the intangibles, we have 2 types of expenses that we have to take ca
Research cost/ex : We try to find sth new but we don’t know whether we success or not
Development cost/ex : We successfully create sth new and it's practicable/feasible

Dispose assets (at the end of useful life) = write it off

How can we? ----> we clear all the accounts related to the assets
Costs of assets
Accumulated Depre SFP:
PPE (cost) X
Dr Accum Depre Accum depre (x)
Dr Loss on disposal (if any) NBV A
Cr PPE
Or, at the end of the useful life, we don’t want to write it off but we want to sell or exchange it
how can we? -----> sell assets and recognize Gain/loss from sale of PPE
SELL:
Dr Accum Depre Dr Accum Depre
Dr Loss on sale of PPE Dr Cash
Dr Cash Cr Gain on sale of PPE
Cr PPE Cr PPE

EXCHANGE (trao đổi có bản chất thương m (làm thay đổi cash flow)
Dr Accum Depre Dr Accum Depre
Dr Loss on exchanging of PPE Dr New PPE
Dr New PPE Cr Gain on exchanging of PPE
Cr old PPE Cr old PPE
(có thể Dr Cash hoặc Cr Cash tùy theo tình huống)
Resources, and Intangible Assets
Property, plant, equipment (fixed assets/tangible assets)
Patents, Copyrights, Franchises….(Intangibles assets)

Natural recources

Khấu hao thành phần: tách TS lớn thành nhữg phần riêng để theo dõi và trích khấu hao
ổng sản lượng ước tín 0.12 per mile

(number of miles that the truck moves in 2020)

uld not be over 100,000 miles

heo số dư giảm dần)

first years than the later years of the useful life

ote: here we start with 13.000 not depreciable amount is 12.000

ote: 1.000 here is salvage value. With this method, we stop calcualating depre when facing Salvage value

ls calculate depre for 5 years.

600

miles = 0,12 0.12

epreciable amount = 13.000-1.000 it's not the 12.000 miles of 2020

 EXPENDITURES AFTER RECOGNITION: 2 TYPES

Revenue expenditures Capital expenditures

All expenses that do not increase All the expenses that increas
the useful life and capability of the assets the useful life and capability o
occuring after initial recognition. occuring after initial recogniti
Ex: small repair, maintenance, painting Ex: enhancing costs, replacem

Dr Expenses
Cr Cash
atural resources X Revenue Expenditure = Income statement expenditure
ccum depletion (X)

coal,…..we use the materials to sell or to make some products and then selling. The purpose of extracting is not to use but to sell---> we b

eciation applied for Intangibles)

ng Amortization
gibles at the end of useful life.

n this case ---> Impairment loss annually

of this type of assets? ---> advanced course.
on, we compute Impairment loss (too much advance for foundation course)

expenses that we have to take care:

Dr Research Ex/Cr Cash
Dr Intangibles/Cr Cash (if only satisfying all criteria specified in IAS 38)
P.I.R.A.T.E
Most: Limited useful life
Except Land: unlimited useful life
group 1: limited useful life
group 2: unlimited useful life
 Capital expenditures
All the expenses that increase
the useful life and capability of the assets
occuring after initial recognition.
Ex: enhancing costs, replacement costs

Dr PPE (increase cost of assets)

Cr Cash
Capital Expenditure = Balance sheet expenditure

s not to use but to sell---> we book to Inventory account, not Expense account.
CHAPTER 8: ACCOUNTING FOR RECEIVABLES

THE CONTENT: Trade receivables includes:

1/How many types of receivables? AR
Notes Receivables (Promissory note): Hua p
Other receivables: Rent receivables, Insuran

2/When TR appear? -----> when making credit sales

If nothing wrong happens, customers pay in full: Dr Cash

Cr TR
If something wrong happens, and the customers cannot pay in full ( maybe they g
Then, the company have to change AR into Uncollectible AR = Doubtful Accounts
The question of this chapter is: How to account for Uncollectible AR or Doubtful a

2 METHODS TO SOLVE
DIRECT WRITE OFF
At the date when the customer cannot pay in full, the company book:
Dr Irrecoverable debt expenses (bad debt ex)
Cr AR/TR

This method is simple, but we cannot use it in the accounting

If cash received later on:

Dr Cash at bank
Cr Irrecoverable debt ex
omissory note): Hua phieu: it's a kind of payment
nt receivables, Insurance Receivables, Interest receivables

Dr TR
Cr Sales

y in full ( maybe they go bankruptcy, they're dead)

= Doubtful Accounts
tible AR or Doubtful accounts?

TO SOLVE
ALLOWANCE METHODS
pany book: I make some guarantees for myself, b/c I guess that u cannot pay in fu
Sorry, I cannt wait until u say sorry, I take care for myself first.
At the end of each period, I guess the % of uncollectible and booking
### Dr Irrecoverable debt expenses (bad debt ex)
Cr Allowance for receivables
The next question is how much is X?

2 METHODS FOR COMPUTING X

% OF SALES
Estimates 2% OF SALES is uncollectible, SALES IS $100,000

### Dr Irrecoverable debt expenses (bad debt ex)

Cr Allowance for receivables

What's next? ----> we use the allowance

How?
Jan 31, the customer calls and say oh so sorry, I went bankruptcy, and
B1Jan-31 Dr Allowance for doubtful account
Cr AR

How can we present the TR and Allowance for doubtful account in SF

Increase an allowance:
Dr Irrecoverable debt expenses (bad debt ex)
Cr Allowance for receivables

Decrease an allowance:
Dr Allowance for receivables
Cr Irrecoverable debt expenses (bad debt ex)
t u cannot pay in full.
myself first.
ctible and booking Bad debt expense first.
X
X

AGING OF RECEIVABLES
 For Example:
My company divide AR into 4 groups
2,000 Group 1: $30,000 over due 30 days
2,000 Group 2: $60,000 over due 60 days
Group 3: $90,000 over due 90 days
Group 4: $10,000 not yet overdue
The policy is: if overdue =<30 days: 5% of uncollectible
If 30 days < ovedue < =60 days: 10% uncollectible
If 60 days < ovedue <= 90 days: 20% uncollectible
If not overdue: 2% of uncolectibles
Calculate bad debt ex base on Aging of AR and book entry?
Bad debt = 5% x 30.000 + 10% x 60.000 + 20% x 90.000 + 2% x 10.000 =
Dec 31, Dr Irrecoverable debt expenses (bad debt ex)
Cr Allowance for receivables

ent bankruptcy, and I cant pay in full

ubtful account in SFP?--> Contra - TR (negative figures)

ncollectible
s: 10% uncollectible
s: 20% uncollectible

nd book entry?
% x 90.000 + 2% x 10.000 = 25.700
es (bad debt ex) 25,700
25,700
bài tập khó nhất chương 7 là 7.4, 7.5, 7.6 -> trước khi thi phải biết làm
đọc phiên bản lần 2 -> làm bài 7.5 a), b)
cô ko cho Intangible asset vs natural resources do nó ko chuẩn xác
sửa bài tập E/ 9.1, 9.2, 9.3, 9.4; P/ 9.1, 9.2, 9.3, 9.4
Thi: format quốc tế lưu chuyển tiền
coi lại bài formative + bài tập chương 7 + bài tập chương 9 + cấu trúc sfp, sci, sce + cash flow statement (slide + format bài làm
ment (slide + format bài làm)