Chapter 7 Notes Flashcards
(262 cards)
Tangible assets
Assets that have physical substance.
Intangible assets
Assets that lack physical substance and often exist based on legal contracts.
Land
Includes the cost of the land and all expenditures necessary to get the land ready for its intended use.
Land improvements
Amounts spent to improve the land, such as parking lots, sidewalks, and landscaping.
Buildings
Structures that are permanently attached to the land.
Equipment
Machinery and tools used in operations.
Natural resources
Assets that are extracted or harvested, such as minerals and oil.
Patents
Exclusive rights granted for an invention for a certain period.
Trademarks
Symbols, names, or slogans used to identify goods or services.
Copyrights
Legal rights that grant the creator of original work exclusive rights to its use and distribution.
Franchises
Rights granted to operate a business under a certain brand or business model.
Goodwill
An intangible asset that arises when a company acquires another for more than the fair value of its net identifiable assets.
Property, Plant, and Equipment
Recorded at the original cost of the asset plus all expenditures necessary to get the asset ready for use.
Cost of Land
Total capitalized cost of land includes purchase price, commissions, back property taxes, title insurance, and leveling costs, minus any cash received from salvaged materials.
Common Mistake
Students often incorrectly add or ignore cash received from the sale of salvaged materials, which reduces the total cost of land.
Accumulated depreciation
The total amount of depreciation expense that has been recorded against an asset over time.
Total current assets
The sum of all current assets, which includes cash, receivables, inventories, and other current assets.
Balance Sheet
A financial statement that summarizes a company’s assets, liabilities, and shareholders’ equity at a specific point in time.
Cash and cash equivalents
Liquid assets that are readily available for use.
Receivables
Amounts owed to a company by customers for goods or services delivered.
Inventories
Goods available for sale in the normal course of business.
Films and television costs
Costs associated with producing films and television shows.
Investments
Assets held for generating income or appreciation.