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Accounting Case

Essay by   •  November 27, 2012  •  Essay  •  295 Words (2 Pages)  •  1,311 Views

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In week two, we learned about preparing the necessary journal entries when

Recording the issuance of bonds, periodic interest, and amortization of bond

Premiums and discounts. An accountant needs to know this information and

Also finds it very important, because if the journal entries are not recorded

Properly it could cause many problems for the corporation. The face value of the

Bonds and the interest should be calculated correctly. The amortization of the

Bond premiums and discounts is the same way. If not recorded correctly the

Calculations could result in being too high or too low for the bonds value.

We also learned that there are many methods to go by when calculating the

Depreciation and amortization expense. The most common method used by

Corporations are the straight line method. Upon review of this method we were

Able to see how the calculations are determined. First you need to determine the

Original price of the asset. Next you determine the useful life of an asset. Lastly

You divide the assets cost by the useful life to obtain the depreciation or

Amortization expense.

One of the other methods corporations use is the declining balance method of

Depreciation. This method is a common calculation system that applies the

Depreciation rate up against the non depreciated depreciation balance, this method

Expenses the assets at a rate that is constant, so the ending calculations show the

Depreciation that is declining for that period. The last method we want to discuss is

The units of activity method uses the expected change with the value over the

Life and also the amount of use within that cost. With each year, the corporation

Receives the same cost per unit with the usage then its multiplied by the number of

Units that are used in that period.

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