COB 218 Chapter Notes - Chapter 8: Cash Flow, Income Statement, Human Capital
Document Summary
Tangible assets include equipment, machinery, natural resources, and land. Although a patent may be represented by legal documents, the privilege is the actual asset. Tangible long-term assets are classified as (1) property, plant and equipment; (2) natural resources; or (3) Property, plant, and equipment is sometimes called plant assets or fixed assets. When sold, the cost of these assets is expensed as costs of goods sold. Natural resources are normally classified as long term because the resource deposits generally have long. To recognize expense for natural resources is depletion. Intangible assets with identifiable useful lives include patents and copyrights. When recognizing expense for intangible assets with identifiable useful lives is called amortization. Intangible assets such as renewable franchises, trademarks, and goodwill have indefinite useful lives. The costs of such assets are not expensed unless the value of the assets becomes impaired. The historical cost concept requires that an asset be recorded at the amount paid for it.
