MGMT 20000 Study Guide - Midterm Guide: Life Insurance, Contingent Liability, Current Liability
5 Jul 2016
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What costs are expensed: capitalize property, plant, and equipment. Costs = cost of asset + all expenditures necessary to get it ready for use. What is a basket purchase: when companies purchase more than one same at the same time for one purchase price. How do you calculate the cost that goes on the books for each asset in a basket purchase? (know the calculations: allocate the total purchase price based on individual fair values. Know the three types of long-term assets: property, plant, and equipment. Recurring costs not part of the cost of equipment. Can be distinguished from property, plant, and equipment by the fact that we can physically use up, or deplete, natural resources. The types of cost recovery methods used for each: property, plant, & equipment. Capitalized cost/lesser of legal or useful life. Successful legal defended also capitalized: natural resources. Know definitions and recovery periods for the types of intangibles discussed in class: patent.
