ACC 231 Lecture Notes - Lecture 15: Amortization Schedule
ACC 231 Lecture 15
Assets
Long-term assets:
● —To be used by the entity on a continuing basis-not intended for sale in the ordinary
course of business
● —An asset that will be used for more than a year
● —Fixed Assets - have physical substance: Land, Buildings, Fixtures, Equipment
● —Intangible Assets – have no physical substance: copyrights, trademarks, software,
customer lists. Often arise from intellectual effort.
● —Natural Resources-Assets that come from the earth (gold, oil, etc)
Fixed Assets:
● —Land, buildings, fixtures, equipment, and natural resources
● —Tangible assets-have physical substance
● —To be used by the entity on a continuing basis-not intended for sale in the ordinary
course of business
● —Recorded at cost at time of purchase
● —Purchase price and related acquisition cost which include costs to get the asset ready
for use.
● —For example legal costs, transportation costs, installation costs, one time taxes, title
fees, etc.
● —At time of purchase create asset on balance sheet (instead of expensing)-this is called
Capitalization
Land and land improvements:
● —All costs that get the asset ready for use can be capitalized.
● —Because land does not typically decline in value it is not depreciated. In other words
there is no systematic method of expensing cost of land throughout its life.
● —Land Improvements-costs to better land but are more temporary in nature: Fencing,
Paving, Sprinkler systems, Street lights, Signs, etc
Document Summary
An asset that will be used for more than a year. Fixed assets - have physical substance: land, buildings, fixtures, equipment. Intangible assets have no physical substance: copyrights, trademarks, software, customer lists. Natural resources-assets that come from the earth (gold, oil, etc) Land, buildings, fixtures, equipment, and natural resources. To be used by the entity on a continuing basis-not intended for sale in the ordinary course of business. Recorded at cost at time of purchase. Purchase price and related acquisition cost which include costs to get the asset ready for use. For example legal costs, transportation costs, installation costs, one time taxes, title fees, etc. All costs that get the asset ready for use can be capitalized. Because land does not typically decline in value it is not depreciated. In other words there is no systematic method of expensing cost of land throughout its life. Land improvements-costs to better land but are more temporary in nature: fencing,
