A product warranty can either be embedded in the cost of the asset itself or sold as a separate extended warranty at an additional cost. The additional cost is not capitalized but treated as a deferred expense in the accounts.
Fixed Asset Register Template
Fixed assets are recorded in the fixed asset register and each fixed asset needs its own fixed asset register card to record full details of the asset.
Property Purchase Deposit Journal Entry
A business pays a cash deposit to secure the acquisition of a property. At the end of the accounting period the contract is not completely satisfied and the deposit is held on the balance sheet as a current asset. Subsequent to the year end the property purchase is completed and the deposit is used in part settlement for the purchase.
Capitalized Interest Cost
Capitalized borrowing costs are those added to the cost of acquiring an asset to bring it to the condition and location necessary for its intended use.
Lump Sum Purchase Calculator
This Excel basket purchase allocation calculator can allocate the total cost of a lump sum purchase over a maximum of 12 assets based on their relative fair market value.
Relative Fair Value Method
When a business purchases an asset which includes several assets such as land, land improvements, and buildings which have dissimilar depreciation rates, it needs to be able to allocate the total cost of the asset to its component parts. The relative fair market value method is one technique used to carry out this allocation.
Capital Improvements After Asset Acquisition
Accounting distinguishes between capital improvements and repairs and maintenance to an asset. A capital improvement is treated as a capital cost and included on the balance sheet of the business, whereas repairs and maintenance are treated as expenses and included in the income statement for the year.
Quiz 55: Capital or Revenue Expenditure Quiz
Test your knowledge of bookkeeping with our online accounting capital or revenue expenditure quiz.
Capital and Revenue Expenditure
Capital expenditures and revenue expenditures are treated differently in accounting. Capital expenditure relates to expenditure on non-current assets, whereas revenue expenditure is expenditure relating to the day to day trading activities of the business.
Excel SLN Function
The Excel SLN function is one of many Excel financial functions, and can be used to calculate the straight line depreciation of a long term asset. It has the syntax SLN (cost, salvage, life).
Basket Purchase Allocation
A business will often purchase a number of long term assets for a single combined purchase price. In order to record the assets in the accounting records and to allow depreciation to be correctly calculated, the basket purchase price needs to be allocated in proportion to the fair market value of the assets.
Fixed Asset Credit For Damages
A business buys a piece of equipment for 4,000. The equipment is damaged during shipping, and the seller gives the business a partial credit of 750.