MGT120H5 Chapter Notes - Chapter 7: The Purchase Price, Canadian Tire, Ddb Worldwide

• School: UTM
• Department: Management
• Course: MGT120H5
• Professor: Catherine Seguin

Document Summary

Tangible long lived assets are called property, plant, and equipment. And the expense that is associated with these assets is called depreciation. Land however is not expensed over time because its usefulness doesn"t decrease. Intangible assets are useful because of the special rights they carry. Summary: land does not get depreciated but ppe does. The cost of land includes its purchase price (cash plus any note payable given). Note payables like real estate commission, survey fees, legal fees, and any back property taxes that the purchaser pays. Land cost also includes expenditures for grading and clearing the land and demolishing or removing unwanted buildings. The cost of land doesn"t include the cost of fencing, paving, sprinkler systems, and lighting. Land improvements -- and these are subject to depreciation. These are recorded in a separate account -- called. Example: pretend canadian tire signs a ,000 note payable to purchase 20acres of land for a new retail store.