Chapter 8 Flashcards
Fixed Assets
Land, Land improvements, buildings, equipment
Land
-purchase price
-closing cost (commissions, title fees)
-taxes owed on purchase date
-grading, filling last forever
-removal of old building
Land Improvements
Parking lots, driveways, sprinkler systems
-purchase price
buildings
factories, offices
-purchasing price
-closing cost
-architect fees, permit fees
-repairs at beginning (remodeling)
Equipment
-purchasing price
-shipping
-taxes
-assembly
-testing
-painting + lettering
Capital expenditures
costs to get the asset ready for its intended purpose
-added to asset on B/S
-increase life of the asset
-changes or improves the functionally of the asset
-no impact on N/I
Revenue expenditures
Other (maintenance costs)
Not added to asset, expensed in I/S
-annual insurance
-annual taxes
-repairs (oil change)
Accumulated depreciation
A/D contra asset/ A/D- total amt. of depreciation exp. we’re used over time
PPE-A/D
net PPE
Book value or Net book value
PPE- A/D
Depreciable cost
amount we anticipated using up an asset
Annual Depreciable cost formula
cost-residual value/ number of useful yrs
IF USED LESS THAN A YEAR
annual depr. x months used/ 12
Patents
exclusive right to control an invention for 20 yrs
only the cost to defend legally or purchase the patent are included in the asset account.
Cost to develop a patent
called Research + Development exp.
