BUS 251 Lecture Notes - Lecture 8: The Purchase Price, Intangible Asset, Book Value

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 251
• Professor: Maureen Fizzel

Document Summary

There are 3 main categories of long-term assets, also known as capital assets: property, plant, and equipment (pp&e) Ex: land, building, machinery, furniture, equipment, vehicle, etc. Companies purchase these assets to use them to generate revenue over multiple future periods. These assets are not purchased for resale: intangible assets. Ex: trademarks, patents, copyrights, licences, franchise rights, customer lists. Must be separately identifiable from other assets because they can be resold, licensed, or rented: goodwill. Long-term asset that arises when two businesses are combines. Represents the expected future economic benefits that will arise from the combination that cannot be separated identified as either pp&e or as intangible assets. Ex: premium, management expertise, corporate reputation, customer loyalty. Companies invest in long-term assets to generate future revenue. These assets generally have significant costs and will impact a company"s operations for many years into the future. They are often critical to a company"s future success and need to be understood by financial statement users.