Fixed Assets Flashcards
The capitalized amount of expenditures made to acquire tangible property which will be used for a period of more than one year
Fixed assets
Only assets that require a period of time to be prepared for use qualify for this
(ex. a building purchased would NOT qualify, but a building constructed over a period WOULD)
interest capitalization
A reciprocal transfer wherein the transferor has no substantial continuing involvement in the asset, and the risks and rewards of ownership are transferred–usually recorded using fair value of asset exchanged
Nonmonetary exchange
Includes the risk, timing, and amount of cash flows
Configuration of cash flows
Expenditures that are not normal, recurring expenses; they benefit the operations of more than one period
Capital expenditures
Expenditures that are norma recurring expenditures
Revenue expenditures
The annual charge to income for asset use during hte period–a noncash expense
Depreciation
Cost of an asset - salvage value
Depreciation base
A depreciation method that does not deduct salvage value when determining depreciation base
Declining balance (or DDB)
A method of depreciation that is used in situatiosn where there are many low-cost tangible assets, such as hand tools for a amnufacturerer or utensils for a restaurant; is advantageous because it is not practical to maintain separate depreciation schedurles for them
Inventory depreciation
Occurs when the carrying amount of a long-lived asset or asset group exceeds its fair value–only is recognized if hte carrying amountof the asset is not recoverable
Impairment
An enterprise that devotes substnatially all of its efforts to establishing a new business and
(1) planned principal operaitons have not commenced
or (2) have commemced, but there has been no significant revenue
Development stage enterprise
