MGMT 30A Study Guide - Final Guide: Dont, Free Cash Flow, Retained Earnings

• School: UC-Irvine
• Department: Management
• Course: MGMT 30A
• Professor: Keith Moore

Document Summary

Plant asset have: physical substances, used in operations, not intended for sale, provide service. Land costs: cash purchase price, closing costs like title and attorney fees, real estate brokers fees, property taxes and other liens on land. Building costs: purchase price, closing costs (attorney fees, title insurace) and real estate broker fees, remodeling and replacing roof, floors, electrical wiring, plumbing. Construction cost of contract price plus payments for architects" fees, building permits and excavation costs. Equipment costs: cash purchase, sales tax, freight charge, insurance for transit, assembling, installing, and testing the unit. Depreciation: process of allocating to expense the cost of a plant asset over its useful life. Applies to land improvements, building, and equipment, not land. Revenue producing ability of asset will decline over its life. Repairs: debit maintenance and repairs expense, credit cash. Straight line method: expense is same each year. Depreciable cost / useful life (in years) = annual depreciation.