Adding a new computer-aided cutting device to an existing machine.c.
Understanding Intangible Assets and Amortization Expense
A government agency may grant a franchise to a private company. A city may give a franchise to a utility company, giving the utility company the exclusive right to provide service to a particular area. Over time as the asset is used to generate revenue, Liam will need to depreciate the asset. No cash is received.a loss must be recognized for the remaining book value. Recording depreciation results in the law firm chart of accounts allocation of the cost of a long-term asset to the years during which the asset provides __________ .
Classifying Assets and Related Expenditures
Multiple choice question.Capitalize the costs and test for impairment.Expense the costs as incurred.Capitalize the costs and amortize them over the expected life of the goodwill.Record as an extraordinary loss in the current year. An asset that has no physical substance is referred to as a(n)Multiple choice question.finite asset.intangible asset.current asset.depreciable asset. When purchasing a patent, a company records it in the Patents account at cost. The firm also debits the Patents account for the cost how is sales tax calculated of the first successful defense of the patent in lawsuits (assuming an outside law firm was hired rather than using internal legal staff).
- Intangible means without physical existence, in contrast to buildings, vehicles, and computers.
- Some supermarkets even purchase large parcels of land to build not only their stores, but also surrounding shopping plazas to draw in customers.
- Multiple select question.Timing test on when the cash flows are received.Test for impairment using the future cash flows.Measurement of the impairment and record the loss.Percentage of assets test for total impaired assets.
- This includes additional costs beyond the purchase price, such as shipping costs, taxes, assembly, and legal fees.
- The term used to describe the amount the company expects to receive for an asset at the end of its service life is ____________.
- Watch this video of the operation of a Georgia-Pacific lumber mill and note where you see all components of property, plant, and equipment in operations in this fascinating production process.
2 Analyze and Classify Capitalized Costs versus Expenses
In contrast, if Liam had the company upgrade the circuit board of the silk-screening machine, thereby increasing the machine’s future capabilities, this would be capitalized and depreciated over its useful life. Depreciation is the process of allocating the cost of a tangible asset over its useful life, or the period of time that the business believes it will use the asset to help generate revenue. This process will be described in Explain and Apply Depreciation Methods to Allocate Capitalized Costs.
Science Periodic Table Vocabulary
Under normal circumstances, this might have been considered just another account fiasco leading cost allocation of an intangible asset is referred to as to the end of a company. (cost + residual value)/service life.service life/(cost + residual value).cost/service life.(cost – residual value)/service life. When assets are purchased in a group for a single sum, it is referred to as aMultiple choice question.composite purchase.basket purchase.business consolidation.group asset divestiture.
- Therefore, this maintenance would be expensed within the current period.
- The parties involved in a franchise arrangement are not always private businesses.
- Many businesses invest a lot of money in production facilities and operations.
- Why are the costs of putting a long-term asset into service capitalized and written off as expenses (depreciated) over the economic life of the asset?
- When an asset is no longer useful, but cannot be sold, it is called an asset __________.
A business must expend cash, or take on debt, or issue owners’ equity shares for an intangible asset in order to record the asset on its books. Building up a good reputation with customers or establishing a well-known brand is not recorded as an intangible asset. Many businesses invest a lot of money in production facilities and operations. Some production processes are more automated than others, and they require a greater investment in property, plant, and equipment than production facilities that may be more labor intensive.