BU127 Lecture Notes - Lecture 13: Intangible Asset, Fixed Asset, Natural Resource
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BU127 Full Course Notes
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Can be both tangible and intangible assets: tangible: physical substance, intangible: no physical substance. Tangible assets: land, assets subject to depreciation buildings, equipment, etc, natural resource assets subject to depletion mineral deposits. Intangible assets: definite life patents, copyright o indefinite life. = net sales revenue / average net fixed assets. This ratio measures a company"s ability to generate sales given investment in fixed assets. The cost principle: long-lived assets are measured at their acquisition costs. Purchase price -> all expenditures needed -> acquisition cost. Cash or cash equivalent -> taxes, legal fees, shipping, etc. Ex: a building: purchase price -> renovation and legal fees -> final cost. Ex: land: purchase price -> real estate commissions, premiums, surveying fees, insurance - > final cost. Expensed (revenue expenditures): wages, interest, etc: benefits limited to the period they are reported in o goes into the income statement.
