AFM101 Chapter Notes - Chapter 9: Historical Cost, Book Value, Fixed Asset

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

Document Summary

Long-lived assets tangible or intangible resources owned by a business and used in its operations to produce benefits over several years. Tangible assets can be touched because has physical substance. 4 kinds of tangible assets for use in operations are: land reported on statement of financial position as a separate item if it has a material value. Land does not become obsolete so it never depreciates. However, may be impaired in value: buildings, fixtures, and equipment reported as separate item on statement of financial position or in notes, biological assets living animals or plants, natural resources include mineral deposits. Frequently arise from intellectual effort and are known as intellectual property. Copyrights, patents, licenses, trademarks, software, franchises, and subscription lists. Cost principle requires that all reasonable and necessary costs incurred in acquiring a long- lived asset, placing it in its operational setting, and preparing it for use should be recorded in a designed asset account.