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& &   & Years"YearsԠﬠ嬠栤䠤謠堤򮠠© Cr.ҮҮﬠӠﬠӠ Dr.ҮҮﬠ宠協򮠠©宍ﬠ宍ﬠ宍ACCOUNTING FOR DEPRECIATIONﬠ宍ﬠ宍ﬠ宍ﬠ宍 ﬠ宍ﬠ宍ˮﬠ宍ﬠ宍宍ﬠ堽宍ﬠ堽宍ﬠ宍ﬠ宍򿍔 ˮﬠ堽宍ﬠ堽宍ˮﬠ堽宍ﬠ堽蠨٩Ωﮍ忍堤栤󠤱協半䬠depreciation expense宠󠤹󠲰t-lineof an asset is:depreciation rate is:󠒮󠒮󠒮󠒮嬠嬠宍占嬠󠱯򠲰宍If the estimated lifethe straigh䮍percentagedepreciationrate䬠纍謠栤蠳assetﬠ򠤱򠤹򠳱Book Value嬠纠(宍ﬠﬠﬠ宍Ġ宍ΠΠ󮍱ﬠ堤찠ԭ堢##Ġﬠ宍Ġﬠ堒  ©協éΠ宍Ġﬠ宍ŠҮﬠԠ宍ﬠԠ宍嬠堤򮠠忠򮠠򮒠©宍򮒠© ҮҮﬠﬠҮ¡ﮍﮍ䬠Accumulated Depreciationoriginal cost󮠠咠© Š􍔨唨© decreaseﬠﬠ䮠 宍䬠򠤳Ġ婮婮ﬠ宍 唔é©唔ĩŠﬠ宍ﬠ堒"嬠(堒"󠤱咮 ©ﬠﬠ讍讍expenditure謠expenditure栤# ﬠӠ ﬠӠﬠӠ󬠠䬠are not䮍 increasesﬠӠĠĠ 䮍󔠠© 䮍󔠠© ﬠĠĠﬠҠ䮍栤堤 􍔨©Z\]^_`abcdefghijklmnopqrstuvwxyz{|}~󺍔Part 6EXPENSE MEASUREMENT; THE INCOME STATEMENTNLearning Objectives墠䠢客䮍󮩍䠤©䠤é占##堠󮠚󠤱ݠݍ宍栤ؠ栤讍讍䠤expenditure栤嬠䮠䠍 ©咠é宍ﬠŠﬠŠﬠ䬠šﬠ䬠š 宍堍唨© 򮍔唨© expense堠either堠either砤 栤堤堤쬠宍쬠宍assets堤asset䍔©䮍© expenses堤expenditures栤栤expense栤砤宍ﬠŠ謠ﬠŠ謠Ӡ쬠쬠讍讍 liability宍堚讠嬠󮩍,Cashdecrease 堠©é蠠ĩincrease 宠堠©é蠠ĩԠﬠ宍ﬠ宍䬠䬠Ӡﬠﬠﬠﬠ堤expenseexpenditure栤䮠 䬍唨© 䮍唨© ﬠ䬠UNEXPIRED AND EXPIRED COSTS󮠠򠱹󠤸򠱹󠤲will󺠚򠱹 򠱹 򠱹 ©éĩ򠱹ﮍﮍ獤砱䍤éĩ㮠䠤㮠䠤㠳䍤󺠚򠳱 򠳱 򠳱 ©宠asset䮠䬠expense獤砱宍ر堤䠤󮠠䬍䮍س䮍زس蠱ر堤䠤سز !رزݠ̠̍ 􍔒 協 嬠砤讠䬠䮠䬠䬠ﬠ宍ﬠﬠ expenseﬠĠŮﬠĠŮ堍䬠䮍󮠠 ©󠠠é󠠠ĩ ©󠠠栱宍宍ﬠ宍ﬠ𬠸宍䮍䮍堤栱堤ﬠ䮍䮍宍䮍䮍ﬠ􍔠 􍔠 砤묠©̠̍ 䠤栱栤䮠䬠䠤栱䮍ﬠ䬠䮍ﬠ䬠䮍䠤䍤ﬠ󠭭䮍ﬠ󠭭䮍 䮍 󍔨䔨© 󮍔䔨© expiredﬠﬠ廠expiredunexpired䮍䮍ﬠ䮍ﬠ䮍ήﬠﬠﬠﬠ assetsé󠠠ĩ?NﬠӠӮﬠӠ宍MATCHING CONCEPT䮠revenuesexpenses䮍栍 󍔨©䮍宠󠍠宍ﬠ宍ﬠ宍prepaid expenses 唠© tangibleﬠ宍ﬠ宍 tangible asset廠intangible asset宠 󮠠唠©䬠䮠󮠠䮍ﮠ䮍䮠 © ﮠᮍﬠ宍OTHER ASSETS THAT WILL BECOME EXPENSES䬠宠宠󠤶堤堤宠宍 ﬠ䮍򠤶򍤸󠤸󍔨唨©宠堤䬠䮍䬠䔨©쬠 䔨© ﬠ謠ﬠ謠eriod嬠򠤶򠤸謠 ﬠﬠmatchingcosts associated with the revenuesof a period are expenses of that p򠳱򠤲宠堒 讍򠳱򠤲砱󮠠 宍䍔© ﬠ䬠󠤴ﮍ󮠠蠳򠤴宍򠤴宍䠠堤ﬠ䮍栤䠤蠳堤䠤讠©é堤ﮍﮍ栤宍宍ﮍﮍ頤宍ĠŠﬠ宍ﬠ宍ĠŠŠŠ򠳱䮍ŠŠ砤宍򠳱򠤲砱砤򠱹 堮 ©堮ﬠ宍ﬠ宍仠宍ĠŠﬠ宍ﬠ宍ĠŠ堨ŠŠ堮 ©堮򠳱堤ŠŠ宍砤宠栍宠򠱹Ġﬠ䬠Ġﬠ 䮍䍔© ﬠ嬰ﬠﬠȠĠӠﬠﬠ٠Š 󠮮©蠮é堮ĠӠȠﬠԠ讍ﬠԠ讍٠Š󮍊堤庍󮠠ﬠ󮠠宍ﬠ宍ĠӠ٠ﬠﬠ堘 󠮮©堮٠Š忍忍ĠӠﬠ嬠栱栍󮠠堤accrued liabilities賸䠤栱򠳱󠤱 栤򠳱䬠栱ݮزرﬠ䮠expenses栱栱栤EXPENSES THAT CREATE LIABILITIES報栤ﬠ嬠depreciationexpense򠤵ﬠﬠ栤򠱹堒  堒 N asset堭嬠堭嬠ﬠﬠ嬠é蔨ĩé蔨ĩ©©堚䬠Ԡ䬠Ԡ䍔©after䬠 © assetﬠprior䬠 ĠԠȠﬠԠ宍ﬠԠ宍ȠĠԠﬠꬲ䠤堍򠱹庠 蠮©ĠԠ堒 堒 ﬠĠﬠﬠ CashĠԠ讍Ԡ讍嬠宍ﬠﬠ宠栱 © 宍栱ӬӮ栱占Ӡ䮍栱ΠŠנԠӠﬠﬠSUMMARY OF MATCHING CONCEPT򠱹嬠conservatism in 19x1.ΠرΠر󱬠©䮍䮍reasonably possiblelosses󮍔© 䬠Ů䬍協씨© ̠䬠󬠍󮠠󮠠٠Šﬠ宍ﬠ宍Ƞ٠ﬠ讍ﬠ讍LOSSES䮠栤 蠮©堮̠䍔©䮍Ϡﬠﬠ ̠ﬠ嬠宍ﬠ嬠宍Πﬠ宍ﬠ宍堵堵ﬠ嬠宍ﬠ嬠宍󠤸̠  ĩ©ũéƩΠΠ̠ʮ宍DateTransactionAmount  宠ݻ嬠ݮ嬠®㮬宍ﬠﬠAN EXAMPLE OF MATCHING㮬󮠠䮍  ̠̠ﬠﬠﬠﬠﬠﬠ䮍ﬠ䮍Ӡ䮍Ӡﬠﬠﬠ  ﬠ堍󍔨©󍔨é󍔨ĩ ﬠ䮍ﬠ䮍ﬠ 󮠠 䮠 䮠ﬠŠﬠŠbeginning© ©ﬠŠﬠŠ liabilityﬠﬠﬠﬠﬠﬠ栤䠤󠤸栤宠󠶮庠DateTransactionCash IncreasesCash Decreases’ 宍ﬠﮍﬠﮍ󠤷堒)<󠒮(<堒4<ﬠŠ宍ﬠŠ㮬嬠HOMES, INC.Income Statement for June堒-󺍊堒+堒&ݮ嬠ﮍ㮬ﬠ堤㮬䮠堤䮍䮍 liabilityﬠ堤嬠堤 宍éĩ was notӠﬠ䮍ﬠ宍堤 宍©ݮ㮬砤ݬ讍ﬠ堭󠤳栤matching䮠嬍󠤴󠤴󠤴ansactionAmount䮍䮍栤󍠤堵󿠚Date Tr”唔嬠栤堤宍󍔨©󠤸󠤲 ĠϠΠԠԠ ݠ宬ؠ٠ک󺍔󠠠©󠠠éӮﬠӮﬠﬠ 􍔨©é 宍宍ĮĮ󮠠宍 䔠© 䮍䔠© ﬠ䮢ﬠ䮢 performed䮍THE INCOME STATEMENT嬠Realization concept  Matching conceptMateriality concept 󮠠 Cost concept ݮԠConservatism conceptGoing-concern concept 䮍eptﮠ订Entity concept嬠箩Dual-aspect conceptMoney-measurement concBASIC CONCEPTS箠ӠﬠԠﬠԠREVIEW OF    ӠӠﬠﬠԠƠﬠŠŠ 協©砠é©é䠠ĩ򠠠ũӧﬠ䮍 isӠ䠭墠䠭墠A PACKAGE OF ACCOUNTING REPORTSﬠ󠭭宍difference墠獔󠠠©ﬠﬠ Š͠ﬠ󠭭宍ﬠ堁󩮍ﬠ堁󩮍  © ©󮍔é攨ĩ increases嬠Ԡ ŠﬠŠԠ嬠宍퍔堠©󮠠宠協堠©Šﬠn  嬠ԠŠ󩮍嬠쬠Extraordinary loss or gai堁net loss󩮍󍔨©󍔨é PԠ䮍ݬ宍ΠҠŠmatchingﬠ䮍ﬠﬠ accounting periodǠ宍宍嬠宍嬠宍嬠宍嬠蠭ᠰ蠭ᠰﬠ򠱹ﬠ򠱹ﬠ򠱹ﬠ򠱹堠󠤶Ӡ򠳱  󮍶宍󠤷砱捠 򠳱 󮍷󮍷宍󮠠󮠠뻠Ġ䮍嬠䬠䠨宍" ŠŠﬠﬠ宍宍 "ŠŠﬠ宍ﬠstart䬠for䬠close䮠© ŠŠŠﬠﬠ砢墠"ŠˮˮŠﬠ嬠䮍ﬠ嬠䮍 balance sheetŠ宍󧍔©©󠤹$堠©not$堠©ΠƠӠϠΠﬠﬠ an expenseΠԠ墬嬠獠䮍宍䠫堭獠䬠䮍ݍ䮠󍠠堍䮍堨䍠䬠堍䬠䠨썠𮍊󮠠󮠠占󮍊󮠠󮍊ꬲKEY POINTS TO REMEMBER䮠󍠠䬠䮍䮠嬠咠󠤶䩮󠤷宍󠸥󠮰󠤷󠮳net income percentage咠 咠󠤲䩮宍 宍INCOME STATEMENT PERCENTAGES嬠percentages䮠Sales revenue󍱰嬠蠠䮍嬠󠱰NﮠCost of salesCost of goodssold 󮍠䮍FINDING COST OF SALES DIRECTLY AND BY DEDUCTIONPart 7INVENTORIES AND COST OF SALESNLearning Objectives䮍󮍠䮍ĠĠ栤 ΠŠΠàﬠ宍宍宍󠤱宍ﬠﬠﬠ򠱹堒 堠©éĩĠΠﬠ򠳱󠤱󠱰' 堒  61,000Accumulated Depreciation  1,000젠#協 Plant  2Depreciation Expense 2咠 󮠠䡍䡍Ǡ捔©嬠󠸵ﬠ塍ﬠ塍嬠䮍䮍ﬠ讍ﬠ讍Ӡ䬠Ԯﬠ䬠ԮҮҮҮﬠﬠҮ䮍Үﬠ򠣶栤ݠ嬠 decreasesﬠﬠ󢍔󠠠© 󠠠© ﬠ嬠ﬠperpetual inventory䮠 䠢ﬠﬠԠƠﬠԠﬠԠ󿠚   ©ԠƠ堭堭ﬠ軠宍ﬠ軠宍砤򠤸讠  堠©Ӡﬠ蠭讍ﬠ蠭讍Ӡ砤򠤸讠 ﬠ󠤸󠤸󮍱󠤶謍򠤸򠤱􍤷ԭInventory)箠쮒Cost of Sales)Accounts Payable)ﬠ堤Ԡﬠ堤Ԡﬠ嬠ﬠ嬠 䮍􍤲砱䠤宍Š䬠Š宍䬠Š宍 砱唨© were塍塍Šﬠ堭ﬠ堭 were䬠䮍beginning inventory砱purchased䍔唨©砱宍©䮍 宍ﬠ宍ﬠ䬠宍 cost of salesԠƠӠĠ宍Ġ 協© © $ӠԠƠﬠ䬠deduction󠤷 嬍䮠󠤲򠤲宍󠤱󠤱䬠󠤱䮠Income StatementMay唔󔔒󠤲󮍱ﬠ䮍ﬠ䮍򠤲卙ﬠӬ󮍲ﬠӬﬠ㮠󮍱ﬠ㮠ﬠﬠ栤available for saleﬠ宍ﬠ宍ﬠ宍ﬠ宍ﬠ栤䠤䮠砤t󠒮堒󠒮쮍쮍󠤴ﬠΠﬠΠ宍Cosﬠ宍ﬠ宍 perpetual󮍔é쒠ĩӠﬠﬠ 젍© é쒠ĩ 䬠䮠䮠shrinkages䮍쬠Ӡ笠宁砭䮍砠©䮍 宍宍쬠Ӡ笠宁砭䢠䠢䢠箠cost of sales󺠠not 嬠嬠䮍䬠© costǠﬠ䮍ﬠ򬱷䬠䮠taking a physical inventory䬠 砱獤򠳱堤䠤򠤲󮍱󮍚Goods available󠠤  H젭󠤱󠤳ﬠ󠤱󠤳󠤴򠤱嬠젲! 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