Chapter 7 Flashcards
What are intangible assets?
Patents, copyrights, franchise rights: these are purchased.
Assets that are internally developed.
What is Goodwill?
An intangible asset that’s reported by the acquiring company for the amount that the purchase price exceeds fair value of the acquired company’s identifiable net assets.
How do you find the amount for a product? (dishwasher, oven, etc.)
Money paid for product (NOT FAIR VALUE) + Transportation costs + Installation fees
How do you find Goodwill?
Purchase Price - (Fair Value Assets - Fair Value Liabilities)
How do you find Depreciation Expense/Accumulated Depreciation?
Cash Purchased - Resdiual Value
/Service Life (years)
How do you find Book Value?
Cash Purchased - Depreciation Value OR Accumulated Depreciation
How do you find Book Value for Year X?
Cash Purcahsed - (Depreciation Expense x Year X)
How do you find Amortization?
Cash Purchased/ Service Life (years)
How do you find Gain/Loss?
Sale price and/or Cash Sold - Book Value
How do you find Asset Turnover?
Net Income and Sales (2nd one)/ Average total Assets
How do you find Profit Margin?
1st Net Income and Sales/ 2nd Net Income and Sales
What should be capitalized?
Costs that increase the service life of an asset
What should NOT be capitalized?
Unsuccessful legal defense of intangible assets
What increases profit margins?
Decreased costs and Increased selling price
What should Loss/Gain be reported as on a Journal entry?
Credit
