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| Ray Johnson - Ch.21
Accounting I Chapter 21 Plant Assets Day 1 Objectives: Students will be able to:
Materials Needed: seating chart, attendance book, pens, pencils, overhead markers, overhead projector, transparencies, handouts, damp cloth, erasers, textbook, working papers, calculator, and grade book. Transparencies: T1-Into T1-1 T1-2 T1-3 T1-4 T1-5 T1-6 T1-7 T1-8 Handouts: H1-1 Procedure: Assume class is fifty minutes. 1. Take attendance. (1 min) 1.
Use seating chart and grade book to take attendance and to mark
who is missing. 2. Introduction. (5-7 min) Transparencies needed: T1-Intro, T1-1 Handouts needed: H1-1 2. In accounting there
are assets, liabilities, and owner’s equity.
There are also different types of assets; supplies, equipment, accounts
receivable, pre-paid insurance just to name a few. But we also have different categories of assets.
Can anyone tell me what the two major categories of assets most
businesses use? (Answer current assets and plant assets) Turn overhead
projector on. Put T1-Intro on
overhead projector. Current assets are defined as “cash and other assets expected to be exchanged for cash or consumed within a year. Plant assets are defined as “assets that will be used for a number of years in the operation of a business. Does anyone know what sorts of things are categorized as plant assets? Take T1-Intro off overhead, and put T1-1 on the overhead. Write down the answers the students give on the overhead. (Desired response-computers, furniture, vehicles, equipment, land, and buildings. There are more plant assets than this.) Most businesses have three major types of plant assets: equipment (both office and store), buildings, and land. In chapter 21 we will be learning how to account for plant assets and depreciation. Pass out H1-1, have students open their books to page 546 while the handout is being passed around. 3. Recording of the buying of plant assets (5-7 min) Transparencies needed T1-2, T1-3 3. Recording the buying of plant assets is similar to recording the buying of current assets. Take T2-1 off overhead, and put T1-2 on the overhead. On March 22 we bought office equipment, a computer, for $2,000 cash Check No.7. Can anyone tell me how we would record this transaction using the T-accounts? (Desired response-Debit Store equipment $2,000; credit cash $2,000) Fill out the T-accounts. Because we are buying with cash we will use the cash payments journal. Take T1-2 off the overhead and put T1-3 on
overhead. Can anyone tell me the first step for recording the buying of
store equipment? (Desired response-first put in the date and them write the
plant asset account, office equipment, in the account title column, C7 in the ck
no. column, 1215 in Post. Ref.) Write the date in the date column and office
equipment in the account title column, ck. no. 7, post ref 1215.) Can someone else tell me the next step? (Desired response-enter the cost of the store equipment, $2,000, in the General Debit column) Write $2,000 in the general debit column. What’s the next step? (Desired response-Enter $2,000 in the cash credit column) Write $2,000 in the cash credit column. Does anyone know the final step? (Desired Response-post the entry in the General Debit column to the account in the Account Title column, store equipment) Write the posting information in the general ledger. Take T1-3 off the overhead when done. 4. Calculating and paying property tax (7-9 min) Transparencies needed T1-4, T1-5,
4. For tax purposes, state and federal governments define two kinds of property-real and personal. Real property is defined as “land or anything attached to the land.” Real property is sometimes also known as real estate. Personal property is any property not classified as real property. For the most case, businesses only have to pay taxes on real property, not personal property, but there are exceptions. We will assume that only real property is taxed. The real property tax is used on buildings and land. To calculate the amount of property tax, we have to take the assessed value of the plant assets and multiply it by the tax rate. Does anyone know how we come up with the assessed value of real property? (Desired response-Persons known as assessors come to the business and use their judgment as to what the value of the real property is) A governmental unit determines a tax rate to use in calculating taxes. Put T1-4 on the overhead. Here is an example of how to calculate amount of property tax the business most pay. Can anyone tell me how you would fill out these T-Accounts? (Desired response-Debit Property Tax Expense for $1,200 and credit Cash for $1,200) Fill out T-Accounts. Take T1-4 off the overhead and put T1-5 on the overhead. To record the payment of property tax, we will use the Cash Payment journal. Can someone tell me the first step to record the payment of property tax? (Desired response-Put the date in the Date column and put Property Tax Expense in the Account Title column, and 187 in ck. no. column) Write the date in the Date column and Property Tax Expense in the Account Title column and 187 in ck no. column. Can someone else tell me the next step? (Desired response-Put the amount, $840 in the General Debit column and the Cash Credit column) Write $840 in the General Debit Column and Cash Credit column. The next step would be to post the entry to the
general ledger. Can anyone tell me
how we would post this to the General Ledger?
(Desired Response-Write Feb 1. in date column, CP1 in Post Ref column,
$1,200 in debit column and debit balance of $1,200) Fill out General Ledger accordingly. 5. Calculating Depreciation Expense (5-7 min) Transparencies needed: T1-6, T1-7 5. Businesses buy plant assets to help them earn revenue. These plant assets do not last forever; they become worn, obsolete, or just not useful anymore. So they have to be replaced. How long an asset lasts is estimated by the business and it’s known as the assets useful life. To match revenue with expenses, a plant asset must be expensed over its useful life. A percentage of the asset's cost is put into an expense account in each fiscal period the asset is being used by the business. Does anyone know the name of the expense account that we transfer it to? (Desired response-Depreciation expense) So how do we calculate the amount that is to be transferred to the expense account? Put T1-6 on the overhead. There are three factors that need to be considered when figure annual depreciation expense. 1. Original Cost: This is the total cost of the plant assets, including price, delivery costs, and installation costs. 2. Estimated Salvage Value: After a plant asset becomes no longer useable, a business will dispose of the asset. Most times the business will receive some compensation for disposing of the asset. This amount is known as the salvage value. Since most businesses don’t know the exact amount they will receive for the disposed asset, they most estimate the salvage value. 3. Estimated Useful Life: As we discussed earlier, plant assets don’t last forever, they must be replaced after a period of time. This period of time is known as the assets useful life. Just like the business doesn’t know the salvage value of an asset when they buy it, they don’t know the useful life either. So they must estimate it. The estimated useful life should be based on prior experience. The IRS and trade associations frequently publish guidelines for plant assets. There are two factors that affect the useful life of a plant asset, physical depreciation, and functional depreciation. There are two major methods of calculating annual depreciation, the straight-line method and the double declining balance method. We will first cover the straight-line method. When we charge an equal amount of depreciation expense for every year of a plant asset’s useful life is known as the straight-line method of depreciation. Go over Transparency
T1-6 Go over how to calculate Depreciation Expense for part of a year. Take T1-6 off overhead
projector, put T1-7 on. Go over T1-7. Ask if students have questions. 6. Calculating Accumulated Depreciation and Book Value (2 min) Transparencies needed: T1-8 6. Accumulated Depreciation is the total amount of depreciation expense that has been recorded since the purchase of a plant asset. Three steps to determine accumulated depreciation. 1. Add up the depreciation that has accumulated over all prior years. 2. Determine the amount of depreciation for the current year. 3. Add the two sums together. Take T1-7 off the overhead, put T1-8 on overhead. Go over T1-8. Ask if students have any questions. 7. Calculating Book Value (2 min) Transparencies needed: T1-8 7. The original cost of a plant asset minus accumulated depreciation is called the book value of a plan asset. For the first year, the book value is the original cost. Every year after that the book value is the original cost minus the accumulated depreciation. The book value can also be calculated by taking the plant asset’s beginning book value minus the year’s annual depreciation. Go over T1-8. Ask if students have any questions. 8. Assignment
Read pg. 544-552. Complete the On Your Own sections on pages 548 and 552.
The extra time will be used for them to start on their assignment. Tell the students that they will be able to make corrections to the assignment the next day when we go over it. They will hand the assignment in and I will check it off if they complete it. I will give it back to them at the end of the hour. This way they can use the assignments as a study guide for the test.
Evaluation: Did I have enough time? What went well? Bad? Comments: Things to change: Accounting 1 Chapter 21 Plant Assets Day 2 Objectives: Students will be able to:
Materials needed: seating chart, attendance book, pens, pencils, overhead markers, overhead projector, transparencies, handouts, damp cloth, erasers, textbook, calculator, answers to assignment, and grade book. Transparencies: T2-1 T2-2 T2-3 T2-4 T2-4 T2-5 T2-6 T2-7 T2-8 T2-9 T2-10 Handouts: H2-1 Procedure: 1. Take Attendance. (1 min)
2. Review Day 1. (2 min)
3. Go over assignment (5 min)
When finished, have the students hand their assignments in. Pass out H2-1. 4. Preparing Plant Asset Records (2 min) Transparencies needed: T2-1
Turn overhead on. Put T2-1 on overhead. Explain the different sections of a plant asset record, and what information they contain.
5. Journalizing Annual Depreciation Expense (3-5 min) Transparencies needed: T2-2
Once a total depreciation expense is calculated, an adjustment needs to be made on the work sheet. After the adjustment is recorded on the work sheet, the information needs to be transferred to the general journal. Take T2-1 off the overhead, and put T2-2 on the overhead. Fill out the general journal from the information on the work sheet. Call on students to help fill out the general journal. Ask the students if they know why we use the account Accumulated Depreciation and not just the asset account. (Desired response-To keep the asset’s original cost) Explain that we use the contra asset account Accumulated Depreciation because we need to retain the plant assets’ original cost. 6. Posting Adjusting Entry for Depreciation expense (3-5 min) Transparencies needed: T2-2
Go over procedure for posting an adjusting entry for depreciation expense. Call on students to give answers. They should have the knowledge to give correct answers because they have posted many times. The general ledger is on T2-2, along with the information needed to post. 7. Disposing of a Plant Asset (8-10 min) Transparencies needed: T2-3, T2-4, T2-5, T2-6, T2-7, T2-8 7. When a plant asset is disposed of, three things must be done.
Calculate any gain or loss by subtracting the book value from the cash received. Take T2-2 off overhead and put T2-3 on overhead. Go over the procedure for recording the sale of plant asset for book value. Ask students if they have any questions. Recording a plant asset’s depreciation expense for a partial year. Explain that the method to calculate a partial year’s depreciation is the same as calculating depreciation when the asset is purchase during the fiscal year. Take T2-3 off the overhead and put T2-4 on the overhead. Go over the procedure on how to record a plant asset’s depreciation expense for a partial year. Ask the students give answers as how to record the transaction on the overhead. Sale of a plant asset for more than book value. When a business sell a plant asset for more than book value, the revenue that results from that sale is called gain on plant assets. Take T2-4 off overhead and put T2-5 on overhead. Go over overhead and ask the students to fill out the T-Accounts on the overhead. Take T2-5 off the overhead and put T2-6 on overhead. Ask the students to fill out the cash receipts journal for the transaction. Sale of a plant asset for less than book value. When a business sells a plant asset for less than book value, there is loss on plant assets. Take T2-6 off the overhead and put T2-7 on overhead. Go over overhead on ask the students to fill out the T-Accounts on the overhead. Take T2-7 off the overhead and put T2-8 on the overhead. Ask the students to fill out the cash receipts journal for the transaction. 8. Declining-Balance Method of Depreciation (3-5 min) Transparencies needed: T2-9, T2-10 8. Calculating Depreciation using the double declining-balance method. Explain that some assets don’t depreciate the same amount every year. Many depreciate more the first few years than in the later years. For example, a truck’s value decreases more in the first year than in any other year. The method used to calculate the amount of depreciation for such an asset is called the double-declining method; this done by multiplying the book value by a constant depreciation rate at the end of each fiscal period. Most businesses use a double-declining rate that is double the straight-line rate. Take T2-8 off the overhead and put T2-9 on overhead. Go over the overhead. Take T2-9 off the overhead and put T2-10 on overhead. Ask the students to fill out the plant asset record on the overhead. Explain that the double-declining method does not use the estimated salvage value to calculate depreciation. The estimated salvage value is used only to limit the last year’s depreciation expense. 9. Assignment Read pages 553-565. Do the on your own sections on pages 556, 561, and 565. The remainder of class can be used to start their homework. Evaluation: Did I have enough time? What went well? Bad? Comments: Things to change: Accounting 1 Chapter 21 Plant Assets Day 3 Objectives: Students will be able to
Materials Needed: seating chart, attendance book, pens, pencils, overhead markers, overhead projector, transparencies, handouts, damp cloth, erasers, textbook, calculator, answers to assignments, and grade book. Transparencies: T3-1 T3-2 T3-3 Handouts: Procedure: 1. Take Attendance. (1 min)
2. Review Day 2. (2 min)
3. Go over assignment. (5 min)
When finished, have the students hand their assignments in. 4. Start the drills for chapter 21. (20 min)
Application problem 21-1: Turn overhead on and put T3-1 on the overhead. Have the students read the problem and then fill out the cash payment journal and the general ledger accounts need to finish the transaction. Application problem 21-2:
Take T3-1 off overhead and put T3-2 on overhead.
Go over problem and have students give answers. Have students fill out the depreciation tables Application problem 21-3: Take T3-2 off overhead and put T3-3 on overhead. Have the students take the answers from 21-2 to complete problem 21-3. They should be able to complete the plant asset record from the information in their working papers. Application problem 21-5: Take T3-3 off overhead and put T3-4 on overhead. Have the students record the disposal of plant assets. They will have the information needed in their working papers. Write the correct procedure on the transparency on the overhead. When done with these application problems, ask the students if they have any questions about any of the problems. Go over any question they have. 5. Assignment
Complete Application problems 21-4 and 21-6. Read and answer the cases for critical thinking on page 570. The rest of the class period will be used to complete the assignment. Evaluation: Did I have enough time? What went well? Bad? Comments: Things to change: Accounting 1 Chapter 21 Plant Assets Day 4 Objectives: Students will be:
Materials needed: seating chart, attendance book, pens, pencils, overhead markers, overhead projector, transparencies, handouts, damp cloth, erasers, textbook, calculator, answers to assignment, and grade book. Transparencies: None Handouts: H4-1 Procedure: 1. Take Attendance (1 min)
2. Review Day 3 (2 min)
3. Go over assignment (5 min)
When finished, have the students hand their assignments in. 4. Review Activity (35 min)
Split the class into two sections by having them number off by 1’s and 2’s. Have a student to volunteer to be the scorekeeper and to help determine what student gets to answer first. After the students have been divided into two groups, hand out handout H4-1. The handout will have all the questions that will be asked in the quiz game. The handout can then be used as a study review for the test. Make sure all the students have put their books and notes away. Rules: Only two students will be able to answer each question, one from each team. The students will be numbered, example, there will be one number one on each team and so on. The scorekeeper will also help determine who raised their hand to answer the question. Each question will be worth one point. If neither of the students can answer the question, no points will be awarded; then ask the entire class if anyone can answer it. If any students not assigned to answer the question answers the question, their team will be penalized one point. This should hopefully cut down on other students telling the contestants the answers. The activity should take the entire class period. If there is any time left over, it can be used to study for the test. 5. Assignment:
There is no assignment because of the test next day. Evaluation: Did I have enough time? What went well? Bad? Comments: Things to change: Accounting I Chapter 21 Plant Assets Day 5 Objectives:
Materials needed: Grade book, seating chart, attendance book, calculators, pens, and chapter tests. Transparencies: None Handouts: None Procedure: 1. Take attendance. (1 min) 2.
Use seating chart and grade book to take attendance and to mark
who is missing. 2. Administer chapter test. (The rest of the period) 3. Ask students if they have any final questions before the start the test. If there are no questions, have the students put their books and notes away. When everything is put away, pass out the test. The students will have the entire period to take the test. When they are done, they should hand in the test and work quietly until everyone is finished. 4. Assignment:
There is no assignment because of the test. Evaluation: Did I have enough time? What went well? Bad? Comments: Things to change |
