BU127 Chapter Notes - Chapter 9: Institute For Operations Research And The Management Sciences, Web Development, Tax Shield
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BU127 Full Course Notes
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Document Summary
Bu127: chapter 9 reporting and interpreting property, plant, and. Long-lived assets: tangible or intangible resources owned by a business and used in its operations to produce benefits over several years. Intangible assets: have property ownership rights but not physical substance (logos, slogans, computer software) Includes intellectual property: copyrights, patents, licenses, trademarks, software, franchises, subscription lists. Fixed asset turnover = net sales (or operating revenues)/average net fixed. Measures sales dollars generated by each dollar of fixed asset used. Increasing rate signals more efficient fixed asset use. Creditors and security analysts use ratio to assess company"s effectiveness in generating sales from long-lived assets. Lower/declining rates may indicate company"s expanding and anticipating higher sales in future. Increasing can symbolize firm cut back on capital expenditures b/c anticipates downturn. Cost principle: requires all reasonable and necessary costs incurred in acquiring a long-lived asset, placing it in its operational setting, and preparing it for use should be recorded in a designated asset account.
