BU127 Lecture Notes - Lecture 10: Book Value, Capital Expenditure, Operating Cash Flow
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BU127 Full Course Notes
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Chapter 9 reporting and interpreting property plant, and equipment; natural resources and tangibles. Long-lived assets: assets used actively in the operations of the business and that are expected to benefit the operations into the future: tangible: land, buildings, furniture, mineral deposits, intangible: patents, copyrights, franchises, trademarks, goodwill. Acquisition cost includes the purchase price and all expenditure needed to prepare the asset for its intended use: does not include interest charges and cash discounts, ex. Building need renovation costs, title fees, legal feels. Basket purchase: an acquisition of two or more assets in a single transaction for a single lump sum ex. Ordinary repairs and maintenance: revenue expenditure. Does not extend life beyond original estimate. Process of allocating the acquisition cost of buildings and equipment over their useful lives by using a systematic and rational method. Carrying amount (book value): the acquisition cost of al asset less accumulated depreciation and any write-downs in asset value (doesn"t equal market value!!)
