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A-IFR > Chapter 10 - PP&E and Intangible Assets > Flashcards

Chapter 10 - PP&E and Intangible Assets Flashcards

1
Q

copyright, patents, trademarks, franchises and goodwill are examples of…

A

intangible assets

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2
Q

a patent is a…

A

intangible asset

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3
Q

a copyright is a

A

intangible asset

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4
Q

a trademark is a

A

intangible asset

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5
Q

a franchise is a

A

intangible asset

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6
Q

goodwill is considered a…

A

intangible asset

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7
Q

oil, gas deposits, timber tracts and mineral deposits are classified as …

A

natural resources

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8
Q

office equipment, manufacturing machines, vehicles, furniture and fixtures are examples of…

A

plant, property & equipment

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9
Q

T or F - sometimes companies list intangibles as part of PP&E

A

true

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10
Q

expenditures for PP&E can include:

A

all expenditures ready to get the asset in condition and in the location for use

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11
Q

expenditures for equipment include the cost of…

A

purchase price (less discounts)

  • taxes
  • transportation
  • installation
  • testing, trial runs
  • reconditioning
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12
Q

Plants, Property & Equipment definition

A

productive assets that derive their value from long-term use in operations, not resale

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13
Q

land (as an asset) definition

A

real property used in operations, not land held for investment

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14
Q

the cost of land used in operations can include…

A
  • purchase price
  • attorney fees
  • title
  • recording fees
  • commissions
  • back taxes or liens
  • mortgage
  • cost to clear, fill, drain or remove old buildings
  • MINUS the cost of any salvaged material (e.g. sold lumber)
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15
Q

what are land improvements

A

enhancements to property

e.g. parking lot, driveway, private roads, fences, landscaping or sprinklers

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16
Q

the cost of buildings can include…

A

purchase price
attorney fees
agent commissions
renovations

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17
Q

natural resources definition

A

productive assets that are physically consumed in operations
e.g. timber, mineral deposits, oil and gas reserves

18
Q

natural resources cost can include

A

acquisition
exploration and development
restoration costs

19
Q

what’s the life of a patent?

A

20 years

20
Q

definition of a patent

A

an exclusive right to manufacture a product or use a process

21
Q

the cost of a patent can include…

A

purchase price
legal fees
filing fees

DO NOT include internal R&D

22
Q

Trademark definition

A

the exclusive right to display a word, slogan, symbol or emblem that distinctively identifies the company, service or product

23
Q

costs of a trademark can include…

A

purchase price
legal fees
filing fees

DOES NOT include internal R&D

24
Q

Franchise definition…

A

A contractual arrangement where you pay for the right to use a trademark, trade name or certain product rights

25
Q

the cost of a franchise can include…

A

franchise fee

any legal fees

26
Q

goodwill definition…

A

the unique value of the company as a whole over and above identifiable assets

27
Q

are training costs to train employees to use new machinery capitalized or expensed?

A

expensed. its usually difficult to quantify it, so it’s expensed

28
Q

acquisition costs (natural resources)

A

the amount paid to acquire the rights to explore undiscovered natural resources

29
Q

exploration costs (natural resources)

A

cost of expenditures like drilling, excavating or searching for natural resources

30
Q

development costs (natural resources)

A

costs incurred after discovery but before production such as expenditures for tunnels, wells an shafts
usually include RESTORATION COSTS

31
Q

restoration costs (natural resources)

A

asset retirement obligation

the costs to restore land to original condition after the extraction of natural resources

32
Q

entry to recognize asset retirement obligation

A

dr related asset

cr asset retirement oblg

33
Q

accretion expense

A

the increase in an asset retirement obligation that accrues as an operating expense

34
Q

entry for accretion expense

A

dr accretion expense

cr asset retirement liability

35
Q

What do you do with legal and filing fees to secure an internally developed patent?

A

capitalize them

36
Q

what do you do with R&D for an internally developed patent?

A

expense

37
Q

how long is a trademark good for?

A

10 years

38
Q

how are franchise fees treated?

A

initial investment is capitalized as an intangible asset over the life of the contract

annual payments on a continuing basis are expensed

39
Q

ARO stands for…

A

asset retirement obligation

40
Q

asset retirement obligations are…

A
  • arise from LEGAL obligations associated with the retirement of an asset
  • obligation must be required during or at the end of the life of the asset e.g. filling in a fracking pond
  • recorded the period the asset is incurred at PV of estimated future cost
41
Q

length of a copyright

A

the life of the creator plus 70 years

A-IFR (3 decks)

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