"Accounting for Plant Assets and Depreciation"

by Linda Keats

Accounting 2 - Chapter 21

Choose from the following small projects.  Points are indicated for each problem.  The entire assignment is worth 100 points.  Choose any combination of projects to total 100 points.  In addition, you may complete an additional project for a maximum of 25 points for extra credit.

Use Microsoft Excel for depreciation tables and plant asset records, and print a formula sheet for each problem.  Use Microsoft Word or PowerPoint on other projects.  Use clipart, word art, borders and shading, etc. to enhance the appearance of your problems.  Use of digital camera is optional.  Each problem must contain a header with your name, the date, and the number of the problem.  Make a cover sheet and staple all problems together in order. 

Grading: 

¨      Quality of work.  Includes accuracy, neatness, formatting techniques, completion 

¨      Work ethic.  Includes having your problems turned in by due date, being on task during class time, displaying a cooperative attitude, and following instructions.

¨      Due date.  ______________________ 

Problem Statements:

1. Depreciation table: Sports equipment at the Youth Center has an original cost of $45,000 with a 10 percent disposal value.  The estimated useful life is ten years.  The sports equipment was purchased on January 4 of the current year. Prepare a depreciation table.  Use the double-declining balance method.(25 points.)

2. Calculating depreciation expense:  (25 points)

For each of the following plant assets:
a) Calculate the total amount to be depreciated
b) Calculate the annual depreciation expense
c) Calculate the depreciation expense for the first year

d) Set up in format used below—add necessary columns

 Depreciation Method:  Straight-line 

3. Issues in the workplace - An increasingly large number of businesses are opening international offices.  Your ability to work with a variety of ethnic, social, educational, and gender groups indicates your acceptance of cultural diversity. 

As one of the partners of SportsPals, a retail distributor of new and used sporting equipment, you are committed to recruiting employees from different cultural backgrounds.  You and your partner have decided to offer workshops on cultural diversity, which you hope will teach your employees to understand and accept cultural diversity. 

Develop a list of ten items to discuss in your workshops, or activities that could be used to educate employees.  These should be items that deal with cultural awareness and gender issues in the workplace.  (20 points)

You can use the Internet to help you with ideas.  Cite the Internet web page(s) you used. 

4. Finding the IRS - You have learned that plant assets are depreciated over their useful life.  The IRS (Internal Revenue Service) determines the time period for which plant assets can be depreciated.  What kinds of items can be depreciated?  What periods of time can be used to depreciate plant assets? 

Locate the IRS website.  Using the site’s searching feature, locate the IRS publication that provides information about depreciating business equipment and furniture.  List five items that the IRS allows to be depreciated.  Over what time period should each item be depreciated?

Print a copy of the web page.  Prepare a short report answering the above questions and explaining what you learned. (20 points)

5. Use the following information to complete a plant asset record:  (25 points) Your business uses the straight-line method for depreciating all plant assets.

Item purchased:                     Copy machine
Serial number:                        X425997-38A

Original cost:                          $12,500

Purchased from:                     R.B.A. Office Supplies

Date of purchase:                  October 2, current year

Location of plant asset:         Executive office lA

Estimated salvage value:      $1,700

                        Estimated life:                        5 years 

6.  Helping Marisa with her business - Marisa Chou took photography at SPASH and loved the course.  She continued her study of photography at a local technical school.  Marisa has done lots of photos of weddings, parties, reunions, etc., and has decided to start her own photography business.  Her business will consist of a reception/consultation room, developing lab, and studio.  Being aware of your experience and expertise in accounting, Marisa has consulted you about setting up the accounting records for her business.  (30 points)

a.   Help Marisa decide on a name for her photography business.

2. Make a partial chart of accounts for Marisa’s business (show plant assets and expenses sections) OR design a logo for the business
   
   
3. Set up a depreciation table for the photography equipment used by the business.  The equipment cost $30,000, has a useful life of ten years, and no salvage value.  Use the double declining balance method.
   
   
4. Explain to Marisa how her plant assets will appear on her balance sheet.  Be specific, and include examples to illustrate your explanation.

  7. PowerPoint presentation. (50 points) 

Explain accounting procedures for depreciation and give examples.  Twelve slides minimum.  Teacher needs to view your slide show when finished.  Print handouts to turn in with your project.  Use transition, effect, and sound.  This will be your original show, so use your imagination.

8. On your own - Design your own project about depreciation.  Begin by writing a proposal to the teacher explaining what you will do.  Proposal must be approved and signed by teacher before the project is started.  You decide on the point value.  (10 to 50 points)

Points for projects: 

1. 25
2. 25
3. 20
4. 20
5. 25
6. 30
7. 50
8. Varies—your proposal

 Textbooks consulted and used in conjunction with this project: Century 21 Accounting and Glencoe Accounting