ACNT 2303 – Intermediate Accounting I
Exam 3 Study Guide
Know how to determine the acquisition cost (the amount to capitalize) of a fixed asset based on
Acquisition of an asset is determined by adding all the relevant cost that will bring the asset in a good working
condition. Some of the cost associated with acquisition of asset include, freight costs, transportation cost in case
of an equipment, demolition costs in case of a building, and excavation costs in case of land. All these cost are
capitalized when accounting for assets.
BONUS: Understand the process and journal entries related to asset retirement obligations
When an asset is disposed or retired, there are a number of entries that need to be done to effect the same
accounting change. When an asset is retired there are three key journal entries that need to be made. First is the
journal entry to record the retirement of the assets under the fixed asset account. Second is the provision for
depreciation account to effect the change on the net amount for accumulated depreciation. Lastly is the disposal
account which determines the net gain or loss of the retired asset.
BONUS: Understand how goodwill is determined, and what journal entry is related to...