Ninja Notes: Fixed Assets Flashcards
What do Capitalized acquisition costs included for EQUIPMENT and BUILDINGS?
All expenditures to get the asset into “working condition” and ready for use.
How are Equipment R&D costs handled?
They are expensed in the period incurred and are not capitalized.
What do Capitalized acquisition costs for LAND include?
All expenditures to get the land ready for its intended use? (Includes demolition and removal of building, minus any scrap or salvage.)
Are capitalized LAND costs depreciated?
No.
If non-monetary assets are exchanged that lack commercial substance, when is the only time a gain can be recognized?
The only gain that can be recognized is any boot (cash) received from the transaction.
How are assets acquired recorded in a non-monetary exchange that lacks Commercial substance?
New Asset acquired is recorded at the BV of the asset given up.
How are assets acquired recorded in a non-monetary exchange that has Commercial Substance?
New Asset is recorded at Fair value of the assets given up, unless the asset acquired has a FV that is easier to determine.
Does a Donor record a gain/loss on donated property?
Yes.
Between DDB, SYD, and S/L, which ignores Salvage value?
DDB.
SYD formula?
(n(n+1))/2
At what level is Goodwill tested for impairment?
At the level of the Reporting unit; never at the Entity level.
What is the Two-step process for testing Goodwill impairment?
1) Compare the CV to the FV. If FV > CV, there is no impairment.
2) If impairment appears to exist, the assets and liabs. should be compared to the total value of the reporting unit. The diff. is Goodwill. Then compare this amount to the CV of the Goodwill and write it down accordingly.
How are software exps. prior to technological feasibility treated?
Expensed as R&D.
How are software exps. after feasibility but prior to production treated?
Capitalized.
How are software exps. incurred during production treated?
They factor into inventory costs.
