AFM101 Chapter Notes - Chapter 9: Intangible Asset, Barrick Gold, Rational Basis Review

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM101
• Professor: Donna Psutka

Document Summary

Notes on chapter 9 reporting and interpreting property, plant, and equipment; natural resources; and intangibles. Most often called plant, property, and equipment: land cannot become obsolete; never depreciated. Can be impaired: buildings, fixtures, and equipment reported in stmt of financial position or the notes, natural resources mineral deposits, oil wells, timber tracts. Intangible assets: examples: name, logo, slogans, computer software, landing rights, often arise from intellectual effort (intellectual property, typical exams: copyrights, patents, licences, trademarks, software, franchises, subscription lists. Fixed asset turnover = net sales (or operating revenues) / average net fixed assets: measures effectiveness of utilizing ppe to generate revenues, high rate normally suggests effective management. Increasing rate signals more efficient fixed asset use: a lower or declining rate may indicate expansion by acquiring additional productive assets in anticipation of higher sales, an increasing ratio could also signal cut backs because anticipation of downturn. Include: sales taxes, legal fees, transportation costs, installation costs.