ACCT1021 Chapter Notes - Chapter 8: Intangible Asset
22 Oct 2016
School
Department
Course
Professor
Document Summary
Long lived assets: tangible and intangible resources owned by a business and used in its operations over several years: tangible assets: assets that have physical substance. Land, building, fixtures, equipment, natural resources: intangible: assets that have special rights but not physical substance. Under the cost principle, all reasonable and necessary expenditures made in acquiring and preparing an asset for use should be recorded as the cost of the asset: capitalized. Acquisition cost: the net cash equivalent amount paid or to be paid for an asset. Debt credit cash/notes payable, debit equipment. Financing leases/capital leases: the acquisition of assets that are reported on the balance sheet. Equity credit common stock/additional paid in capital/cash, debit equipment. Capitalized interest: interest expenditures included in the cost of a self constructed asset. Ordinary repairs and maintenance: expenditures that maintain the productive capacity of an asset during the current accounting period only and are recorded as expenses.
