ACCTG 211 Lecture Notes - Lecture 11: Income Statement, Accelerated Depreciation, Matching Principle
Document Summary
Acctg 211 - lecture 11 - acquisition and long term assets review. Operational assets are used by a business to generate revenue. Long-term assets will be used more than one year. Tangible operational assets are reported on the balance sheet in a classification called: property, plant, and equipment (land, buildings, fixtures, and equipment) Intangible operational assets lack physical substance and confer specific use rights on the owner. Purchased operational assets recorded at cost, an amount that includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use. Renovation and repair cost incurred prior to use. When land and building are purchased together, the land cost and the building cost are placed in separate accounts. The total cost of the purchase is separated on the basis of relative market values. The matching principle requires that part of the acquisition cost be expensed in periods when the future revenues are earned.
