Long

lived assets 1. intangible - definite life = patent, copywrite, franchise - indefinite life= trademark, goodwill 2. tangible- land,(not depreciable) building equip, furniture (depreciates), natural resource (depletes) fixed asset turnover ratio= net revenue / avg. net fixed asset acquisition cost = purchase price + additional cost for intended use construction cost = all materials + labor + overhead+ interest on debt incurred during construction ordinary repairs revenue extraordinary repair / additions = capital revenue= income statement account debited, lower income, lower tax capital = balance sheet debited, higher income, higher tax depreciation methods: straight line = cost residual / life in years units of production= cost residual / life in units of production accelerated method: declining balance method acc. depreciation = net book value (cost acc. Depreciation) x (2/life in yrs) unit depletion(used with natural resources)=final cost residual / units depletion cost = unit depletion cost x units depletion cost = inventory , cost of good sold, and rest in unsold inventory ASSET IMPAIRMENT - - recognize a loss when an asset suffers permanent impairment the impaired asset should be written down to its net realizable with loss being recognized

goodwill = the amount by which the purchase price exceeds net assests aquired ch7 inventory = merchandise, raw materials, work in prog, finished goods

cost principle- requires that inventory be recorded at the price paid(may include invoice, freight, etc) INVENTORY Goods available for sale = beginning inventory + purchases Goods available for sale ending inventory= cost of goods sold Costing methods 1. specific identification the specific cost of each unit sold is added 2. first in , first out assign older costs to units sold, recent costs use in ending inventory in period of rising price, this will provide lowest cost of good sold 3. last in, first out assign most recent costs to the units sold 4. weighted average average cost of the goods available for sale / number of units for sale the choice of inventory costing method is not based on physical flow of goods lifo conformity rule if lifo is used on income tax return, it must also be used to calc inventory and cost of goods sold ending inventory is reported at the lower of cost or market company will recognize holding loss in current period , practice is conservative inventory turnover = cost of goods sold / average inventory inventory and cash flows net decrease in inventory = add net increase in inventory= subtract net decrease in acc. Payable = subtract net increase in acc. Payable = add lifo permited in china, usa

revenue principle =revenues be recorded when earne

interest rate ,when to take discount amt saved/ amt payed x (365/days) net sales = sales revenue credit card discount sales discount- sales return and allowance gross profit percentage = gross profit / net sales (gross prof = net sale cost of good) allowance for doubtful account = XA net realizable receivables =accnt receivable allowance for doubtful account write off uncollect , credit acc. Receive. And debit (XA-) aging acounts receivable desired amt credit amt = adjustment desired amt + debit amt = adjustment receivable turnover = net sale /avg. net trade receivables cash flow and receivables = increase in receivables subtracted from net income decrease in receivables added to net income eps= net income pref dividens/ #oustanding shares common size income statement has % return on equity roe = net income /avg. stockholder equity roe=prof margin xasset turnover x fin. Leverage