Plant Asset Disposals, Natural Resources, and Intangible Assets

This chapter details the events that need to be dealt with when disposing assets. There are balance sheet and income statement entries that must be recorded when getting rid of equipment by scrapping it or selling it. It also discusses intangible assets, how to record them, and how to account for their diminishing value. Many business entities will eventually 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. You will learn the journal entries for 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 what to do when a fire or flood that destroys an asset.

Learning objectives

After studying this chapter, you should be able to:

  • Calculate and prepare entries for the sale, retirement, and destruction of plant assets.
  • Describe and record exchanges of nonmonetary assets.
  • Determine the periodic depletion cost of a natural resource and calculate depreciation of plant assets located on extractive industry property.
  • Prepare entries for the acquisition and amortization of intangible assets.
  • Analyze and use the financial results-total assets turnover.


Source: Textbook Equity, https://learn.saylor.org/pluginfile.php/41442/mod_resource/content/16/AccountingPrinciples2.pdf
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