As this title suggests, this chapter will detail the events necessary to be dealt with when disposing assets. There are balance sheet and income statement entries that must be recorded when getting rid of equipment either by scrapping it or selling it. You will also learn about intangible assets, what they are, how to record them, and how to account for their diminishing value.
You should read and take notes on Sections 11.1 through 11.10 of Chapter 11 on pages 120 through 155.
Section 11.1 will provide chapter-specific learning objectives.
Section 11.2 provides another look at a potential employment opportunity for someone interested in the business of accounting.
Section 11.3 discusses how, with the exception of land, all assets become of little to no use and a company will have to make the decision to trade the asset for a newer version, retire the asset altogether, or just simply sell the asset. How is this decision made? This section of the course provides some insight on responding to this question.
Section 11.4 discusses the sale of a plant asset. There will come a time when many business entities will have to dispose of a plant asset. When this happens, the company will either have a loss or show a gain, depending on the difference between the asset's sale price and its book value. This section shows how the journal entries look in a variety of situations, including a gain on the sale of an asset, a loss on the sale of an asset, how to realize loss, and even what to do in the event of a fire or flood that destroys an asset.
Section 11.5 provides insight on the concept of depletion of a natural resource and how you would journalize such entries.
Section 11.6 identifies the sources of an intangible asset. Pay careful attention to the identification of concepts like trademarks, amortization, patents, copyrights, trademarks, goodwill, and franchises.
Section 11.7 provides an explanation of the total assets turnover ratio, which illustrates the relationship between monetary volume and the average of the total asset. You will also be provided with an explanation of the learning objectives as they have been identified in this chapter. Finally, you will be provided with some demonstration problems and the solutions to those problems.
Section 11.8 revisits the terms from this chapter that you have connected with during your studies.
Section 11.9 provides you with a self-test of true/false and multiple-choice questions. There are other self-test questions, but the answers are only provided for the true/false and multiple-choice questions within the chapter. The solutions to self-test are located on pages 173 and 174 in Chapter 11.