COB 241 Chapter Notes - Chapter 8: Title Search, Sales Tax, Historical Cost

• School: JMU
• Department: College of Business
• Course: COB 241
• Professor: James Irving

Document Summary

8: accounting for long term operational assets. Current assets used relatively quickly (inventory/ office supplies) used within a single accounting period. Long term operational assets used for extended periods of time (equipment or buildings) two or more accounting periods. Property, plant, and equipment: recognized by depreciation. Amortization: the term used when recognizing expense for intangible assets with identifiable useful lives. Historical cost concept: requires that an asset be recorded at the amount paid for it. Buildings: purchase price, sales tax, title search and transfer document costs, realtor"s and attor(cid:374)e(cid:455)"s fees, remodeling costs. Land: purchase price, sales tax, title search & transfer document costs, realtor"s a(cid:374)d attor(cid:374)e(cid:455)"s fees, costs for removal of old buildings, grading costs. Equipment: purchase price (less discounts, sales taxes, delivery costs, costs to adapt for intended use. Depreciation expense: the amount of a(cid:374) asset"s cost that is allocated to e(cid:454)pe(cid:374)se duri(cid:374)g a(cid:374) accou(cid:374)ti(cid:374)g period. Salvage value: the expected market value of a fully depreciated asset.