ACC 100 Chapter 8: ACC 100 Chapter 8 Notes.docx

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13 Mar 2012
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Tangible assets: having physical substance (ex: a machine) Intangible assets: lacking physical substance (ex: a copyright) Acquisition cost: the amount that includes all of the costs normally necessary to acquire an asset and prepare it for its intended use (original cost) Items included in acquisition cost: purchase price, taxes paid at time of purchase (ex: sales tax, transportation charges. Group purchases: purchases several assets as a group and pays a lump-sum amount. Capitalization of interest: capitalization of interest: interest on constructed assets is added to the assets account. Land improvements: land improvements: costs that are related to land but that have a limited life. Use and depreciation of property, plant, and equipments: Depreciation: the allocation of the original cost less residual value of a capital asset to the periods benefited by its use. Straight-line method: a method by which the same dollar amount of depreciation is recorded in each year of asset use.

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