# Accounting for Plant Assets and Depreciation Chapter 18, Section 1 Buying Plant Assets and Paying Property Taxes.

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Accounting for Plant Assets and Depreciation Chapter 18, Section 1 Buying Plant Assets and Paying Property Taxes

What is an asset? Something of value that is owned. Examples? 2 Categories of assets ▫Current assets ▫Plant assets  Equipment  Building  Land

Recording the Buying of a Plant Asset January 3, 20X1. Paid cash for a display case, \$3,250.00. Check No. 4. 1.Which accounts are affected? Store Equipment Cash 4.How is each amount entered in the accounts? Assets increase on the debit side. Assets decrease on the credit side. 3.How is each classification changed? Assets are increased. Assets are decreased. 2.How is each account classified? Store Equipment is an asset account. Cash is an asset account. Cash Store Equipment Debit Normal Balance Debit Normal Balance  3,250.00 

Recording the Buying of a Plant Asset 12 3 January 3, 20X1. Paid cash for a display case, \$3,250.00. Check No. 4. 3.Cash paid 4 2.Cost of the plant asset 1.Account title 4.Post

Calculating and Paying Property Taxes Real vs. Personal Property ▫Real property is land and anything attached to the land. (aka Real Estate) ▫Personal property is all property not classified as real property. Assessed Value ▫The value of an asset as determined by tax authorities. ▫Used for calculating property taxes.

Calculating and Paying Property Tax February 1. Classic Parts, Inc., paid cash for property tax, \$720.00. Check No. 69. CashProperty Tax Expense Debit Normal Balance Debit Normal Balance  720.00  Annual Property Tax =Tax Rate× Assessed Value \$720.00=1.2%×\$60,000.00

T ERMS REVIEW current assets plant assets real property personal property assessed value

P ROBLEMS Work Together 18-1 (text pg. 537) On Your Own 18-1 (text pg. 537) Application Problem 18-1 (text pg. 556)

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