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 October 31st, 2018 by Michael Brown
Read more

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 June 7th, 2018 by Michael Brown
Read more

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 November 13th, 2017 by Michael Brown
Read more

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 August 11th, 2017 by Michael Brown
Read more

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 August 9th, 2017 by Michael Brown
Read more

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 April 5th, 2019 by Michael Brown
Read more

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 November 14th, 2018 by Michael Brown
Read more

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 November 6th, 2016 by Michael Brown
Read more

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 November 6th, 2016 by Michael Brown
Read more

You May Also Like