ACT 2200 Lecture Notes - Lecture 9: Operating Lease, Title Insurance, Profit Margin
Document Summary
Set 9: tangible resources such as land and depreciable property--buildings, machinery, vehicles and furniture, which are used in the business (rather held for resale); and, whose useful life is greater than one year. Life history of plant assets: acquisition, subsequent expenditures, cost recovery (depreciation, disposition. The historical cost principle requires that plant assets are recorded at cost. Cost consists of all expenditures necessary to acquire the asset and make it ready for its intended use. Determining which cost to include in plant assets is very important. Capital expenditure - increase the company"s investment in productive activity. Revenue expenditure - is immediately charged against revenue as an expense. Capital expenditure increase the company"s investment in productive activity. Revenue expenditure is immediately charged against revenue as an expense. 1. the cash paid in a cash transaction, or : the cash equivalent price paid when noncash assets are used.
