Chapter 9(part 2) Flashcards
Revenue Expenditures(aka)
- expenses
- ordinary repairs and maintenance
Capital expenditures(aka)
-assets
- seldom occur
- large amounts of $$$$$$
- extended life
- greater efficiency
- additions
Depreciation is important to what time periods?
-future time
Depletion
systematic allocation of the cost of a natural resource to future periods in which asses contribute services
dr: depletion expense
cr: accumulated depletion or asset
Amortization
allocation of the cost of an intangible asset to future periods in which the assets contribute services
dr: amortization expense
cr: accumulated amortization or asset
Points on Intangible Assets
- have no physical substance
- provide future benefits
- benefits are derived from legal rights
- must acquired so they have a cost
- have a limited life
Examples of Intangible Assets
-patents, franchises and licenses, goodwill, trademarks, copyrights, and organizational cost
Research and Development
expensed in the period incurred
-patents have to be purchased or defended to be an asset
-those developed in-house are treated as expenses
Goodwill
is a result of increased earnings potential due to nme recognition/good reputation
-business can only record goodwill if it is paid for in connection with the purchase of an on-going business
Impairment
a permanent decline in the market value of an asset is an impairment period in which the decline occurs.
-written down to new market value
What does the FASB require in regards to recognition on losses?
-immediate recognition
Goodwill is analyzed for what?
impairment rather than amortized
Where do we disclose the method of depreciation?
footnotes
good will formula
fmv- purchase price
gain or loss formula
sales price
-book value
