Fixed Assets Warranty Accounting

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.

Last modified December 13th, 2019 by Michael Brown
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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.

Last modified November 8th, 2019 by Michael Brown
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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.

Last modified December 16th, 2019 by Michael Brown
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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.

Last modified January 9th, 2023 by Michael Brown
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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.

Last modified November 8th, 2019 by Michael Brown
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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.

Last modified January 7th, 2020 by Michael Brown
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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.

Last modified January 7th, 2020 by Michael Brown
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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).

Last modified January 10th, 2023 by Michael Brown
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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.

Last modified March 15th, 2023 by Michael Brown
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