Business Administration 2257 Chapter Notes - Chapter 9: The Purchase Price, Title Search, Capital Cost
25 Apr 2019
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They are long lived resources that a company controls, are tangible, and are not intended for sale to customers. They are used for the production and sale of goods or services to customers, for rental to others, or for administrative purposes. Operating expenditures: costs that benefit only the current period. Capital expenditure: costs that benefit future periods are capitalized (included) in a long-lived asset account and recorded as either property, plant or equipment. Asset retirement costs: if there are obligations to dismantle, remove, or restore the long-lived asset when it is retired, these costs must also be estimated and included in the cost of the asset. Operating expenditures generally benefit only the current period. They are required to maintain an asset in its normal operating condition and often recur, although not always annually. Capital expenditures after acquisition include costs that increase the life of an asset or its productivity or efficiency.
