Business Administration 2257 Chapter Notes - Chapter 9: Intangible Asset, Postdevelopment Theory, Income Tax
13 Oct 2015
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Property, plant, and equipment: property, plant, and equipment are long-live resources that company controls, have physical substance, are used in operations of business, and aren"t intended for sale to customers, determines company"s production capacity. Liability recorded b/c as soon as asset is acquired, company has obligation. Lessor: party allowing its assets to be leased. Income tax advantages: company deducts rent paid on income tax return, may be greater than deductions if asset was owned, off-balance sheet financing, company doesn"t have to show liability b/c didn"t take out bank loan. 3 methods straight-line, diminishing-balance, and units-of-production: choose method that will best reflect pattern in which asset"s future economic benefits are expected to be consumed reviewed at least annually. If expected pattern of consumption has ed, depreciation method may be ed. Depreciation expense=(hv rv ) : hv = historical value, rv = residual value, useful if economic benefit of asset is fairly consistent over time.
