RSM220H1 Chapter Notes - Chapter 10: Capital Asset, Book Value, European Cooperation In Science And Technology
Document Summary
Definition: they are held for use in the production of goods and services, for rental to others, or for administrative purposes. They are not intended for sale in the ordinary course of business: they are used over more than one accounting period and are usually depreciated. Property, plant, and equipment provide services over many years. Through periodic depreciation charges, the cost of the investment in these assets, with the usual exception of land, is assigned to the periods that benefit from using them: they are tangible. These assets have a physical existence or substance, which makes them different from in tangible assets such as patents or goodwill. If both are met, the item is capitalized. While the recognition principle is clear, the standards do not specify what level of asset should be recognized. This is referred to as a unit of measure issue.
