D104 is the middle course of WGU's intermediate accounting sequence, focused on long-lived assets and the claims against them: liabilities and equity.
WGU's program guide says the course covers acquisition and disposition of noncurrent assets; depreciation, impairments and depletion; intangible assets; current liabilities and contingencies; long-term obligations; stockholders' equity; dilutive securities; and time value of money concepts. Intermediate Accounting I is the prerequisite.
Bond accounting and impairment tests are where most students slow down. Both rely on present value skills from D103.
Course at a Glance
| Item | Details |
|---|---|
| University | Western Governors University (WGU) |
| Code | D104 |
| Level | Undergraduate, B.S. Accounting |
| Competency units | 3 |
| Prerequisite | Intermediate Accounting I |
| Typical work | GAAP problems on assets, liabilities and equity (check your course page for the assessment format) |
What D104 Covers
| Competency (summarized) | Key topics |
|---|---|
| Account for property, plant and equipment | Cost capitalization, exchanges, disposals |
| Account for intangible assets | Patents, goodwill, research and development |
| Account for depreciation, impairment and depletion | Methods, impairment tests, natural resources |
| Account for liabilities | Current liabilities, contingencies, bonds, notes |
| Account for equity | Stock issues, treasury stock, dividends, dilutive securities |
Key Concepts Explained
Capitalizing PP&E
Cost includes everything needed to get an asset ready for use: purchase price, delivery, installation and testing. Routine repairs are expensed.
Depreciation Methods
Straight-line spreads cost evenly. Double-declining balance applies twice the straight-line rate to book value, front-loading expense. Units-of-activity ties depreciation to use.
Example: A $40,000 asset with a 5-year life and no residual value. Straight-line: $8,000 a year. Double-declining: year 1 = 40% x $40,000 = $16,000; year 2 = 40% x $24,000 = $9,600.
Impairment
Under U.S. GAAP, an asset held for use is tested for recoverability: if its carrying amount exceeds undiscounted future cash flows, an impairment loss is measured as carrying amount minus fair value.
Bonds
Bonds are issued at a premium or discount when the stated rate differs from the market rate. The effective-interest method recognizes interest expense at the market rate on the carrying value.
Example: A company issues bonds with a face value of $100,000 at a price of $96,000 to yield 6%, with an annual cash coupon of $5,000. First-year interest expense = 6% x $96,000 = $5,760. The $760 difference amortises the discount, raising the carrying value to $96,760.
Equity and Dilutive Securities
Equity topics include issuing common and preferred stock, buying back shares as treasury stock, and cash, stock and property dividends. Each changes the components of stockholders' equity differently.
Dilutive securities, such as convertible bonds and stock options, could increase the number of shares outstanding. That matters for earnings per share: basic EPS uses actual weighted shares, while diluted EPS assumes conversion or exercise where it would reduce EPS.
Example: Net income is $500,000 and weighted shares are 200,000, so basic EPS is $2.50. If convertible securities would add 50,000 shares and $25,000 of after-tax income, diluted EPS = $525,000 / 250,000 = $2.10.
Typical Tasks and How to Approach Them
| Task type | What it tests | How to approach it |
|---|---|---|
| Depreciation schedules | Method calculations | Build a year-by-year table with book value |
| Impairment problems | Two-step recognition and measurement | Test recoverability first, then measure the loss |
| Bond amortisation | Effective-interest method | Set up a schedule: cash, expense, amortisation, carrying value |
| Equity transactions | Correct accounts and EPS | Track each equity component separately |
Intangible Assets and Goodwill
Intangible assets lack physical substance but provide future benefits: patents, trademarks, copyrights, customer lists and goodwill.
| Type | Treatment under U.S. GAAP |
|---|---|
| Limited life (e.g. patent) | Amortised over useful life; tested for impairment |
| Indefinite life (e.g. some trademarks) | Not amortised; tested for impairment at least annually |
| Goodwill | Arises only from acquisitions; not amortised by public companies; tested for impairment |
| Internal research and development | Generally expensed as incurred |
Example: A company pays $5 million for a business whose identifiable net assets have a fair value of $4.2 million. Goodwill of $800,000 is recorded. Internally generated goodwill, by contrast, is never capitalized.
Knowing which costs can be capitalized, and which must be expensed, answers a large share of intangible questions.
Where Students Get Stuck
- Impairment steps. Recoverability uses undiscounted cash flows; the loss uses fair value.
- Bond premiums versus discounts. A stated rate above market creates a premium.
- Contingencies. Record a loss contingency only when probable and reasonably estimable; otherwise disclose or ignore.
- Treasury stock. It reduces equity; it is not an asset.
Study Tips for D104
- Refresh present value from D103 before bond problems.
- Build amortisation schedules in Excel to see the pattern.
- Summarize each equity transaction's effect in a table.
- Practice EPS with and without dilutive securities.
How We Help with D104
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Frequently Asked Questions
PP&E acquisition and disposal, depreciation, impairment and depletion, intangibles, current and long-term liabilities, stockholders' equity, dilutive securities and time value of money.
WGU lists Intermediate Accounting I (D103).
Yes. Long-term obligations are listed, which includes bond accounting.
Earnings per share calculated as if dilutive securities such as convertibles or options had been converted or exercised.
WGU uses objective assessments, performance assessments or both. Check your course page for the current format.
Yes, with worked problems and explanations. We do not take assessments for students.