ACCT 1510 Chapter Notes - Chapter 7: Intangible Asset, Asset, Capital Asset
13 Mar 2016
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Divided into 3 categories: property, plant, and equipment, intangible assets, natural resources. Capital assets represent future economic benefits that will be used in the normal course of operations. Property, plant, and equipment tangible assets used in the normal operations of a company. Typical costs of acquiring property, plant, and equipment: land improvement. Demolition of unwanted buildings, less any salvage: building. The cost principle requires that a company record its property, plant, and equipment at the exchange price at the time the asset is purchased. Quite often, several assets are acquired in a single transaction for a single lump sum: in this situation, known as a basket purchase, the cost of each asset must be measured and recorded separately. Depreciation the process of allocating, in a systematic and rational manner, the cost of a tangible capital asset (other than land) to expense over the asset"s useful life. Depreciation is not an attempt to accumulate cash for the replacement of an asset.
