Common Noncurrent Assets

Question 1

Investments in common stock or debt securities made for long-term investment purposes where the company’s objective is one of control, affiliation, or some continuing business relationship with the issuing company.

Answer 1

Investments

Question 2

Long-lived tangible assets used in the company’s operations. Land is reported at its original cost and is not depreciated owing to an indefinite life assumption. Other long-lived assets are reported at their net book value (their original cost less their related accumulated depreciation).

Answer 2

Property, Plant and Equipment

Question 3

represents the allocation to accounting periods of the costs of long-lived assets due to use and obsolescence. An annual charge for depreciation is included in the expenses of current operations. The amount of this depreciation expense is related to the anticipated useful life of the assets, which may be computed on the basis of either expected years of service or actual use (i.e., hours of operation, units of production, etc.). The accumulated amount of previously recognized depreciation expense related to the fixed assets still carried on the books of the company is presented on the balance sheet in an account called “accumulated depreciation.” Often, the company will provide only the property plant and equipment amount net of accumulated depreciation.

Answer 3

Accumulated Depreciation

Question 4

Intangibles are assets without physical substance that provide economic benefits through the rights and privileges associated with their possession. Examples of intangible assets include patents, copyrights, trademarks, franchises, licenses, and leaseholds. Intangible assets may be classified as having either a finite or indefinite life. The cost of intangible assets that have a finite life, such as patent, is amortized as an expense over their useful life. The cost of intangibles with indefinite lives, such as goodwill, is not amortized. Rather, it is tested periodically for impairment and, if impaired, written down to its lower value with a corresponding charge to earnings.

Answer 4

Intangible Assets